Company registration number 09168966 (England and Wales)
C R DOWN FARMING LIMITED
ANNUAL REPORT AND FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 JANUARY 2024
C R DOWN FARMING LIMITED
COMPANY INFORMATION
Directors
Mr C R Down
Mrs K J Down
Company number
09168966
Registered office
Hayes Barton
East Budleigh
Budleigh Salterton
Exeter
Devon
EX9 7BS
Auditor
Simpkins Edwards Audit LLP
The Summit
Woodwater Park
Pynes Hill
Exeter
EX2 5WS
C R DOWN FARMING LIMITED
CONTENTS
Page
Strategic report
1 - 2
Directors' report
3 - 4
Independent auditor's report
5 - 7
Statement of comprehensive income
8
Balance sheet
9
Statement of changes in equity
10
Statement of cash flows
11
Notes to the financial statements
12 - 25
C R DOWN FARMING LIMITED
STRATEGIC REPORT
FOR THE YEAR ENDED 31 JANUARY 2024
- 1 -
The directors present the strategic report for the year ended 31 January 2024.
Review of the business
The principal activities of the company continue to be the farming of pigs and agricultural contracting.
The financial statements reflect an improved performance on the previous year, as demonstrated by the following key performance indicators:-
The increase in turnover and profit margins was attributable primarily to increases in pork prices. The average sales value per pig sold increase by approximately 40% during the year ended 31 January 2023. Sales prices rose further during the year ended 31 January 2024 but levelled off early in the year. Pork prices have eased slightly since year end but remain strong.
The company's main input cost is pig feed. Feed costs were lower on average during the year ended 31 January 2024 than in the preceding year, which saw a number of factors, including the Russian invasion of Ukraine increase raw material costs.
Principal risks and uncertainties
The outlook for the pig production industry is reasonably positive. The departure of some pig producers from the industry has reduced the supply of pork and that has supported the current price levels.
Input costs are difficult to predict, with feed in particular being affected by factors such as the weather and the impact of overseas conflicts on worldwide supplies of grain.
Financial Instruments and Risk Management
The company maintains a variety of facilities, including bank overdrafts, bank loans, trade creditors, trade debtors, hire purchase arrangements and loans to and from connected parties as its principal financial instruments. The purpose of these financial instruments is to provide finance for the group's day to day operations and to fund asset purchases to support those activities, as necessary.
Liquidity risk on the overdraft facility is managed by balancing expenditure with available income streams. The overdraft incurs interest at floating rates. The liquidity risk associated with hire purchase arrangements and other loans from financial institutions is managed by ensuring that sufficient funds are available to meet interest and capital calls as they are made. These loans carry a mixture of fixed and variable rates of interest so there is some exposure to changes in Bank of England Base Rate.
Trade debtors are predominantly major UK food processing companies who operate on contractual payment terms which present minimal bad debt risk. Trade creditors represent a range of enterprises used to service business operations. Settlement is achieved through the bank overdraft facility and managed by balancing receipts from trade debtors with payments to trade creditors.
Loans to and from connected parties are repayable as cash flow permits.
C R DOWN FARMING LIMITED
STRATEGIC REPORT (CONTINUED)
FOR THE YEAR ENDED 31 JANUARY 2024
- 2 -
Mr C R Down
Director
24 October 2024
C R DOWN FARMING LIMITED
DIRECTORS' REPORT
FOR THE YEAR ENDED 31 JANUARY 2024
- 3 -
The directors present their annual report and financial statements for the year ended 31 January 2024.
Principal activities
The principal activities of the company are that of pig farming and agricultural contracting.
Results and dividends
The results for the year are set out on page 8.
No ordinary dividends were paid. The directors do not recommend payment of a final dividend.
Directors
The directors who held office during the year and up to the date of signature of the financial statements were as follows:
Mr C R Down
Mrs K J Down
Auditor
Simpkins Edwards Audit LLP were appointed as auditor to the company and in accordance with section 485 of the Companies Act 2006, a resolution proposing that they be re-appointed will be put at a General Meeting.
Statement of directors' responsibilities
The directors are responsible for preparing the annual report and the financial statements in accordance with applicable law and regulations.
Company law requires the directors to prepare financial statements for each financial year. Under that law the directors have elected to prepare the financial statements in accordance with United Kingdom Generally Accepted Accounting Practice (United Kingdom Accounting Standards and applicable law). Under company law the directors must not approve the financial statements unless they are satisfied that they give a true and fair view of the state of affairs of the company and of the profit or loss of the company for that period. In preparing these financial statements, the directors are required to:
select suitable accounting policies and then apply them consistently;
make judgements and accounting estimates that are reasonable and prudent;
prepare the financial statements on the going concern basis unless it is inappropriate to presume that the company will continue in business.
The directors are responsible for keeping adequate accounting records that are sufficient to show and explain the company’s transactions and disclose with reasonable accuracy at any time the financial position of the company and enable them to ensure that the financial statements comply with the Companies Act 2006. They are also responsible for safeguarding the assets of the company and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.
Statement of disclosure to auditor
So far as each person who was a director at the date of approving this report is aware, there is no relevant audit information of which the company’s auditor is unaware. Additionally, the directors individually have taken all the necessary steps that they ought to have taken as directors in order to make themselves aware of all relevant audit information and to establish that the company’s auditor is aware of that information.
Medium-sized companies exemption
This report has been prepared in accordance with the provisions applicable to companies entitled to the medium-sized companies exemption.
C R DOWN FARMING LIMITED
DIRECTORS' REPORT (CONTINUED)
FOR THE YEAR ENDED 31 JANUARY 2024
- 4 -
On behalf of the board
Mr C R Down
Director
24 October 2024
C R DOWN FARMING LIMITED
INDEPENDENT AUDITOR'S REPORT
TO THE MEMBERS OF C R DOWN FARMING LIMITED
- 5 -
Opinion
We have audited the financial statements of C R Down Farming Limited (the 'company') for the year ended 31 January 2024 which comprise the statement of comprehensive income, the balance sheet, the statement of changes in equity, the statement of cash flows and notes to the financial statements, including significant accounting policies. The financial reporting framework that has been applied in their preparation is applicable law and United Kingdom Accounting Standards, including Financial Reporting Standard 102 The Financial Reporting Standard applicable in the UK and Republic of Ireland (United Kingdom Generally Accepted Accounting Practice).
In our opinion the financial statements:
give a true and fair view of the state of the company's affairs as at 31 January 2024 and of its profit for the year then ended;
have been properly prepared in accordance with United Kingdom Generally Accepted Accounting Practice; and
have been prepared in accordance with the requirements of the Companies Act 2006.
We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and applicable law. Our responsibilities under those standards are further described in the Auditor's responsibilities for the audit of the financial statements section of our report. We are independent of the company in accordance with the ethical requirements that are relevant to our audit of the financial statements in the UK, including the FRC’s Ethical Standard, and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
Conclusions relating to going concern
In auditing the financial statements, we have concluded that the directors' use of the going concern basis of accounting in the preparation of the financial statements is appropriate.
Based on the work we have performed, we have not identified any material uncertainties relating to events or conditions that, individually or collectively, may cast significant doubt on the company's ability to continue as a going concern for a period of at least twelve months from when the financial statements are authorised for issue.
Our responsibilities and the responsibilities of the directors with respect to going concern are described in the relevant sections of this report.
The other information comprises the information included in the annual report other than the financial statements and our auditor's report thereon. The directors are responsible for the other information contained within the annual report. Our opinion on the financial statements does not cover the other information and, except to the extent otherwise explicitly stated in our report, we do not express any form of assurance conclusion thereon. Our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the course of the audit, or otherwise appears to be materially misstated. If we identify such material inconsistencies or apparent material misstatements, we are required to determine whether this gives rise to a material misstatement in the financial statements themselves. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact.
We have nothing to report in this regard.
Comparative figures
The comparative figures in these financial statements were not audited. However, this has not resulted in a qualification of this audit report.
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.
C R DOWN FARMING LIMITED
INDEPENDENT AUDITOR'S REPORT
TO THE MEMBERS OF C R DOWN FARMING LIMITED (CONTINUED)
- 6 -
Matters on which we are required to report by exception
In the light of the knowledge and understanding of the company and its environment obtained in the course of the audit, we have not identified material misstatements in the strategic report or the directors' report.
We have nothing to report in respect of the following matters in relation to which the Companies Act 2006 requires us to report to you if, in our opinion:
adequate accounting records have not been kept, or returns adequate for our audit have not been received from branches not visited by us; or
the financial statements are not in agreement with the accounting records and returns; or
certain disclosures of remuneration specified by law are not made; or
we have not received all the information and explanations we require for our audit.
Responsibilities of directors
As explained more fully in the directors' responsibilities statement, the directors are responsible for the preparation of the financial statements and for being satisfied that they give a true and fair view, and for such internal control as the directors determine is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error. In preparing the financial statements, the directors are responsible for assessing the company's ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the directors either intend to liquidate the company or to cease operations, or have no realistic alternative but to do so.
Auditor's responsibilities for the audit of the financial statements
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor's report that includes our opinion. Reasonable assurance is a high level of assurance but is not a guarantee that an audit conducted in accordance with ISAs (UK) will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements.
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. In so doing, we considered the following:-
The nature of the company, its control environment and performance indicators;
Results of our enquiries of management and directors regarding their own identification and assessment of the risks of irregularities; and
the matters discussed among the audit engagement team regarding how and where irregularities might occur in the financial statements and any potential indicators of fraud.
As a result of these procedures, we considered the opportunities and incentives that may exist within the company for fraud and identified the greatest potential for fraud in relation to stock valuation and the recognition of revenue. In common with all audits under ISAs (UK), we are also required to perform specific procedures to respond to the risk of management override.
C R DOWN FARMING LIMITED
INDEPENDENT AUDITOR'S REPORT
TO THE MEMBERS OF C R DOWN FARMING LIMITED (CONTINUED)
- 7 -
We also obtained an understanding of the legal and regulatory framework that the company operates in, focusing on provisions of those laws and regulations that had a direct effect on the determination of material amounts and disclosures in the financial statements. The key laws and regulations we considered in this context relate to Animal Welfare, Health and Safety and the UK Companies Act.
Our procedures in response to the risks identified included the following:
reviewing the financial statement disclosures and testing to supporting documentation;
understanding and evaluating the design and implementation of management controls;
performing analytical procedures to identify any unusual or unexpected relationships that may indicate risks of material misstatement due to fraud;
challenging assumptions and judgements made by management in their significant accounting estimates, in particular, in relation to stock valuation and income recognition;
review of Animal Welfare compliance reports and Health and Safety assessments, legal and professional costs and correspondence with insurers; and
in addressing the risk of fraud through management override of controls, testing the appropriateness of journal entries and other adjustments; assessing whether the judgements made in making accounting estimates are indicative of a potential bias; and evaluating the business rationale of any significant transactions that are unusual or outside the normal course of business.
There are inherent limitations in the audit procedures described above and the further removed non-compliance with laws and regulations 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.
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.
Jonathan Williams BSc ACA CTA
Senior Statutory Auditor
For and on behalf of Simpkins Edwards Audit LLP
24 October 2024
Chartered Accountants
Statutory Auditor
The Summit
Woodwater Park
Pynes Hill
Exeter
EX2 5WS
C R DOWN FARMING LIMITED
STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEAR ENDED 31 JANUARY 2024
- 8 -
2024
2023
as restated
Notes
£
£
Turnover
4
14,563,670
13,367,688
Cost of sales
(12,941,090)
(12,599,273)
Gross profit
1,622,580
768,415
Administrative expenses
(123,783)
(73,749)
Other operating income
209,541
229,526
Operating profit
5
1,708,338
924,192
Interest receivable and similar income
354
21,346
Interest payable and similar expenses
7
(222,638)
(183,596)
Profit before taxation
1,486,054
761,942
Tax on profit
8
(159,277)
(166,288)
Profit for the financial year
1,326,777
595,654
The profit and loss account has been prepared on the basis that all operations are continuing operations.
C R DOWN FARMING LIMITED
BALANCE SHEET
AS AT 31 JANUARY 2024
31 January 2024
- 9 -
2024
2023
as restated
Notes
£
£
£
£
Fixed assets
Tangible assets
9
4,556,387
3,872,137
Investment property
10
1,673,214
1,673,214
Investments
11
100,000
6,329,601
5,545,351
Current assets
Stocks
13
3,378,468
2,903,988
Debtors
14
3,101,785
3,042,379
6,480,253
5,946,367
Creditors: amounts falling due within one year
15
(5,144,280)
(5,370,913)
Net current assets
1,335,973
575,454
Total assets less current liabilities
7,665,574
6,120,805
Creditors: amounts falling due after more than one year
16
(1,942,378)
(1,909,179)
Provisions for liabilities
Deferred tax liability
19
1,322,963
1,138,170
(1,322,963)
(1,138,170)
Net assets
4,400,233
3,073,456
Capital and reserves
Called up share capital
21
2
2
Profit and loss reserves
4,400,231
3,073,454
Total equity
4,400,233
3,073,456
These financial statements have been prepared in accordance with the provisions relating to medium-sized companies.
The financial statements were approved by the board of directors and authorised for issue on 24 October 2024 and are signed on its behalf by:
Mr C R Down
Director
Company registration number 09168966 (England and Wales)
C R DOWN FARMING LIMITED
STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 JANUARY 2024
- 10 -
Share capital
Profit and loss reserves
Total
£
£
£
As restated for the period ended 31 January 2023:
Balance at 1 February 2022
2
2,046,195
2,046,197
Effect of change in accounting policy
-
431,605
431,605
As restated
2
2,477,800
2,477,802
Year ended 31 January 2023:
Profit and total comprehensive income
-
595,654
595,654
Balance at 31 January 2023
2
3,073,454
3,073,456
Year ended 31 January 2024:
Profit and total comprehensive income
-
1,326,777
1,326,777
Balance at 31 January 2024
2
4,400,231
4,400,233
C R DOWN FARMING LIMITED
STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED 31 JANUARY 2024
- 11 -
2024
2023
as restated
Notes
£
£
£
£
Cash flows from operating activities
Cash generated from operations
25
1,281,888
841,695
Interest paid
(222,638)
(183,596)
Income taxes refunded/(paid)
114,455
(20,000)
Net cash inflow from operating activities
1,173,705
638,099
Investing activities
Purchase of tangible fixed assets
(1,248,552)
(174,671)
Proceeds from disposal of tangible fixed assets
465,961
Purchase of investments
(100,000)
Interest received
354
21,346
Net cash used in investing activities
(882,237)
(153,325)
Financing activities
Repayment of bank loans
(70,752)
(92,452)
Payment of finance leases obligations
(265,255)
(213,680)
Net cash used in financing activities
(336,007)
(306,132)
Net (decrease)/increase in cash and cash equivalents
(44,539)
178,642
Cash and cash equivalents at beginning of year
(114,129)
(292,771)
Cash and cash equivalents at end of year
(158,668)
(114,129)
Relating to:
Bank overdrafts included in creditors payable within one year
(158,668)
(114,129)
C R DOWN FARMING LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 JANUARY 2024
- 12 -
1
Accounting policies
Company information
C R Down Farming Limited is a private company limited by shares incorporated in England and Wales. The registered office is Hayes Barton, East Budleigh, Budleigh Salterton, Exeter, Devon, EX9 7BS.
1.1
Accounting convention
These financial statements have been prepared in accordance with FRS 102 “The Financial Reporting Standard applicable in the UK and Republic of Ireland” (“FRS 102”) and the requirements of the Companies Act 2006.
The financial statements are prepared in sterling, which is the functional currency of the company. Monetary amounts in these financial statements are rounded to the nearest £.
The financial statements have been prepared under the historical cost convention modified to include investment properties at fair value. The principal accounting policies adopted are set out below.
1.2
Going concern
Atruet the time of approving the financial statements, the directors have a reasonable expectation that the company has adequate resources to continue in operational existence for the foreseeable future. Thus the directors continue to adopt the going concern basis of accounting in preparing the financial statements.
1.3
Turnover
Turnover comprises the fair value of the consideration received or receivable for the sale of goods and provision of services in the ordinary course of the company's activities. Turnover 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.
Income from agricultural contracting is recognised at the point at which the service has been provided to the customer.
1.4
Tangible fixed assets
Tangible fixed assets are initially measured at cost and subsequently measured at cost or valuation, net of depreciation and any impairment losses.
Depreciation is recognised so as to write off the cost or valuation of assets less their residual values over their useful lives on the following bases:
Freehold buildings
2% per annum on cost
Plant and equipment
5 - 15% per annum on book value
Motor vehicles
20% per annum on book value
Freehold land is not depreciated.
The gain or loss arising on the disposal of an asset is determined as the difference between the sale proceeds and the carrying value of the asset, and is credited or charged to profit or loss.
C R DOWN FARMING LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 JANUARY 2024
1
Accounting policies
(Continued)
- 13 -
1.5
Investment property
Investment property, which is property held to earn rentals and/or for capital appreciation, is initially recognised at cost, which includes the purchase cost and any directly attributable expenditure. Subsequently it is measured at fair value at the reporting end date. Changes in fair value are recognised in profit or loss.
1.6
Fixed asset investments
Interests in subsidiaries, associates and jointly controlled entities are initially measured at cost and subsequently measured at cost less any accumulated impairment losses. The investments are assessed for impairment at each reporting date and any impairment losses or reversals of impairment losses are recognised immediately in profit or loss.
A subsidiary is an entity controlled by the company. Control is the power to govern the financial and operating policies of the entity so as to obtain benefits from its activities.
An associate is an entity, being neither a subsidiary nor a joint venture, in which the company holds a long-term interest and where the company has significant influence. The company considers that it has significant influence where it has the power to participate in the financial and operating decisions of the associate.
1.7
Stocks
Stocks are stated at the lower of cost and estimated selling price, less costs to complete and sell. The costs of pigs include an accumulation of feed, labour and other direct costs.
1.8
Cash and cash equivalents
Cash and cash equivalents are basic financial assets and include cash in hand, deposits held at call with banks, other short-term liquid investments with original maturities of three months or less, and bank overdrafts. Bank overdrafts are shown within borrowings in current liabilities.
1.9
Financial instruments
The company has elected to apply the provisions of Section 11 ‘Basic Financial Instruments’ and Section 12 ‘Other Financial Instruments Issues’ of FRS 102 to all of its financial instruments.
Financial instruments are recognised in the company's balance sheet when the company becomes party to the contractual provisions of the instrument.
Financial assets and liabilities are offset, with the net amounts presented in the financial statements, when there is a legally enforceable right to set off the recognised amounts and there is an intention to settle on a net basis or to realise the asset and settle the liability simultaneously.
Basic financial assets
Basic financial assets, which include debtors and cash and bank balances, are initially measured at transaction price including transaction costs and are subsequently carried at amortised cost using the effective interest method unless the arrangement constitutes a financing transaction, where the transaction is measured at the present value of the future receipts discounted at a market rate of interest. Financial assets classified as receivable within one year are not amortised.
Classification of financial liabilities
Financial liabilities and equity instruments are classified according to the substance of the contractual arrangements entered into. An equity instrument is any contract that evidences a residual interest in the assets of the company after deducting all of its liabilities.
C R DOWN FARMING LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 JANUARY 2024
1
Accounting policies
(Continued)
- 14 -
Basic financial liabilities
Basic financial liabilities, including creditors, bank loans, loans from fellow group companies and preference shares that are classified as debt, are initially recognised at transaction price unless the arrangement constitutes a financing transaction, where the debt instrument is measured at the present value of the future payments discounted at a market rate of interest. Financial liabilities classified as payable within one year are not amortised.
Debt instruments are subsequently carried at amortised cost, using the effective interest rate method.
1.10
Equity instruments
Equity instruments issued by the company are recorded at the proceeds received, net of transaction costs. Dividends payable on equity instruments are recognised as liabilities once they are no longer at the discretion of the company.
1.11
Taxation
The tax expense represents the sum of the tax currently payable and deferred tax.
Current tax
The tax currently payable is based on taxable profit for the year. Taxable profit differs from net profit as reported in the profit and loss account because it excludes items of income or expense that are taxable or deductible in other years and it further excludes items that are never taxable or deductible. The company’s liability for current tax is calculated using tax rates that have been enacted or substantively enacted by the reporting end date.
Deferred tax
Deferred tax liabilities are generally recognised for all timing differences and deferred tax assets are recognised to the extent that it is probable that they will be recovered against the reversal of deferred tax liabilities or other future taxable profits. Such assets and liabilities are not recognised if the timing difference arises from goodwill or from the initial recognition of other assets and liabilities in a transaction that affects neither the tax profit nor the accounting profit.
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 when the company has a legally enforceable right to offset current tax assets and liabilities and the deferred tax assets and liabilities relate to taxes levied by the same tax authority.
1.12
Employee benefits
The costs of short-term employee benefits are recognised as a liability and an expense, unless those costs are required to be recognised as part of the cost of stock or fixed assets.
1.13
Retirement benefits
Payments to defined contribution retirement benefit schemes are charged as an expense as they fall due.
C R DOWN FARMING LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 JANUARY 2024
1
Accounting policies
(Continued)
- 15 -
1.14
Leases
Leases are classified as finance leases whenever the terms of the lease transfer substantially all the risks and rewards of ownership to the lessees. All other leases are classified as operating leases.
Assets held under finance leases are recognised as assets at the lower of the assets fair value at the date of inception and the present value of the minimum lease payments. The related liability is included in the balance sheet as a finance lease obligation. Lease payments are treated as consisting of capital and interest elements. The interest is charged to profit or loss so as to produce a constant periodic rate of interest on the remaining balance of the liability.
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.
2
Change in accounting policy
Pig stock valuation
In previous years the company's stock of pigs has been valued using a deemed cost method based on sales values less an assumed gross profit margin. These financial statements reflect the change to a method based upon the accumulation of direct costs relating to pigs in stock at year end. Direct costs include feed, labour, utilities and other costs, which are calculated on the basis of an average cost per pig per day.
Investment properties
In previous years, investment properties have been valued at the net present value of future income receivable under lease agreements and with an assumption that the residual value of the properties at the end of the leases would be equal to original cost. A new methodology has been introduced, which assumes that properties will be let beyond the current lease terms and takes into account general return on investment expectations as well as net present value calculations. The revised valuation will be kept under review and fair value movements accounted for when there is an indication of a material change. A deferred tax liability has been accounted for on the difference between the valuation and original cost of the properties.
The comparative financial information and opening balances have been restated on the new accounting bases in order to present the results and financial position on a consistent basis. The financial impact of the above adjustments is set out in the Prior Period Adjustment note.
C R DOWN FARMING LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 JANUARY 2024
- 16 -
3
Judgements and key sources of estimation uncertainty
In the application of the company’s accounting policies, the directors are required to make judgements, estimates and assumptions about the carrying amount of assets and liabilities that are not readily apparent from other sources. The estimates and associated assumptions are based on historical experience and other factors that are considered to be relevant. Actual results may differ from these estimates.
The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised where the revision affects only that period, or in the period of the revision and future periods where the revision affects both current and future periods.
Critical judgements
The following judgements (apart from those involving estimates) have had the most significant effect on amounts recognised in the financial statements.
Investment property valuation
The company's investment properties have been valued by the directors using net present value and return on investment calculations as detailed in the Investment Properties note. Judgement is used in determining the discount factor to be applied to projected rental income under lease agreements, the residual value of properties at the end of current lease arrangements and in estimating return on investment percentages applicable to projected income.
4
Turnover and other revenue
2024
2023
£
£
Turnover analysed by class of business
Farming
14,493,052
13,302,394
Renewable energy and other income
70,618
65,294
14,563,670
13,367,688
2024
2023
£
£
Other revenue
Interest income
354
21,346
5
Operating profit
2024
2023
Operating profit for the year is stated after charging/(crediting):
£
£
Fees payable to the company's auditor for the audit of the company's financial statements
18,000
Depreciation of owned tangible fixed assets
353,999
258,671
Depreciation of tangible fixed assets held under finance leases
93,471
57,721
Profit on disposal of tangible fixed assets
(41,890)
-
C R DOWN FARMING LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 JANUARY 2024
- 17 -
6
Employees
The average monthly number of persons (including directors) employed by the company during the year was:
2024
2023
Number
Number
Operations
11
13
Their aggregate remuneration comprised:
2024
2023
£
£
Wages and salaries
399,240
390,144
Social security costs
34,503
33,723
Pension costs
6,666
6,588
440,409
430,455
7
Interest payable and similar expenses
2024
2023
£
£
Interest on financial liabilities measured at amortised cost:
Interest on bank overdrafts and loans
122,284
62,514
Other finance costs:
Interest on finance leases and hire purchase contracts
5,087
12,294
Other interest
95,267
108,788
222,638
183,596
8
Taxation
2024
2023
£
£
Current tax
UK corporation tax on profits for the current period
68,939
Adjustments in respect of prior periods
(94,455)
(23,355)
Total current tax
(25,516)
(23,355)
Deferred tax
Origination and reversal of timing differences
314,817
189,643
Previously unrecognised tax loss, tax credit or timing difference
(130,024)
Total deferred tax
184,793
189,643
Total tax charge
159,277
166,288
C R DOWN FARMING LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 JANUARY 2024
8
Taxation
(Continued)
- 18 -
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:
2024
2023
£
£
Profit before taxation
1,486,054
761,942
Expected tax charge based on the standard rate of corporation tax in the UK of 25.00% (2023: 25.00%)
371,514
190,486
Tax effect of expenses that are not deductible in determining taxable profit
63
6,657
Tax effect of utilisation of tax losses not previously recognised
(130,024)
Adjustments in respect of prior years
(94,455)
(23,355)
Permanent capital allowances in excess of depreciation
(6,721)
(7,500)
Depreciation on assets not qualifying for tax allowances
18,900
Taxation charge for the year
159,277
166,288
9
Tangible fixed assets
Freehold buildings
Plant and equipment
Motor vehicles
Total
£
£
£
£
Cost
At 1 February 2023
839,549
4,644,572
40,505
5,524,626
Additions
1,555,791
1,555,791
Disposals
(713,785)
(713,785)
At 31 January 2024
839,549
5,486,578
40,505
6,366,632
Depreciation and impairment
At 1 February 2023
1,621,485
31,004
1,652,489
Depreciation charged in the year
75,600
369,970
1,900
447,470
Eliminated in respect of disposals
(289,714)
(289,714)
At 31 January 2024
75,600
1,701,741
32,904
1,810,245
Carrying amount
At 31 January 2024
763,949
3,784,837
7,601
4,556,387
At 31 January 2023
839,549
3,023,087
9,501
3,872,137
C R DOWN FARMING LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 JANUARY 2024
9
Tangible fixed assets
(Continued)
- 19 -
The net carrying value of tangible fixed assets includes the following in respect of assets held under finance leases or hire purchase contracts.
2024
2023
£
£
Plant and equipment
776,804
479,317
10
Investment property
2024
£
Fair value
At 1 February 2023 and 31 January 2024
1,673,214
The fair value of investment properties has been determined by the directors based on a combination of net present value and return on investment calculations, having regard to the terms of leases with property tenants. There have been no independent professional valuations of the properties concerned. The directors keep the valuation of the properties under review and movements in fair value are accounted for when there is an indication of a material change.
11
Fixed asset investments
2024
2023
£
£
Unlisted investments
100,000
Movements in fixed asset investments
Investments
£
Cost or valuation
At 1 February 2023
-
Additions
100,000
At 31 January 2024
100,000
Carrying amount
At 31 January 2024
100,000
At 31 January 2023
-
12
Associates
Details of the company's associates at 31 January 2024 are as follows:
C R DOWN FARMING LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 JANUARY 2024
12
Associates
(Continued)
- 20 -
Name of undertaking
Registered office
Class of
% Held
shares held
Direct
D S Developments (Exeter) Limited
Lorams, Perkins Village, Exeter, EX5 2JG
Ordinary
50.00
13
Stocks
2024
2023
£
£
Livestock
3,378,468
2,903,988
14
Debtors
2024
2023
Amounts falling due within one year:
£
£
Trade debtors
702,093
673,615
Corporation tax recoverable
20,000
Other debtors
2,320,770
1,953,174
Prepayments and accrued income
78,922
395,590
3,101,785
3,042,379
15
Creditors: amounts falling due within one year
2024
2023
Notes
£
£
Bank loans and overdrafts
17
230,636
291,128
Obligations under finance leases
18
188,696
145,632
Trade creditors
677,743
750,530
Corporation tax
68,939
Other taxation and social security
6,088
11,113
Other creditors
3,893,207
4,138,960
Accruals and deferred income
78,971
33,550
5,144,280
5,370,913
16
Creditors: amounts falling due after more than one year
2024
2023
Notes
£
£
Bank loans and overdrafts
17
1,839,688
1,805,409
Obligations under finance leases
18
102,690
103,770
1,942,378
1,909,179
C R DOWN FARMING LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 JANUARY 2024
16
Creditors: amounts falling due after more than one year
(Continued)
- 21 -
Amounts included above which fall due after five years are as follows:
Payable by instalments
1,478,969
1,577,793
17
Loans and overdrafts
2024
2023
£
£
Bank loans
1,911,656
1,982,408
Bank overdrafts
158,668
114,129
2,070,324
2,096,537
Payable within one year
230,636
291,128
Payable after one year
1,839,688
1,805,409
Bank loans and overdrafts are secured over assets of the company and by personal guarantees given by the company's director / shareholders.
The company's bank loan is repayable over a total period of 25 years and bears interest at a variable rate.
18
Finance lease obligations
2024
2023
Future minimum lease payments due under finance leases:
£
£
Within one year
188,696
145,632
In two to five years
102,690
103,770
291,386
249,402
Finance lease payments represent rentals payable by the company for certain items of plant and machinery. Leases include purchase options at the end of the lease period, and no restrictions are placed on the use of the assets. The average lease term is 3 years. All leases are on a fixed repayment basis and no arrangements have been entered into for contingent rental payments.
Obligations under finance lease and hire purchase contracts are secured by fixed charges over the assets to which they relate within plant and machinery.
C R DOWN FARMING LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 JANUARY 2024
- 22 -
19
Deferred taxation
The following are the major deferred tax liabilities and assets recognised by the company and movements thereon:
Liabilities
Liabilities
2024
2023
Balances:
£
£
Accelerated capital allowances
945,909
761,116
Revaluations
377,054
377,054
1,322,963
1,138,170
2024
Movements in the year:
£
Liability at 1 February 2023
1,138,170
Charge to profit or loss
184,793
Liability at 31 January 2024
1,322,963
20
Retirement benefit schemes
2024
2023
Defined contribution schemes
£
£
Charge to profit or loss in respect of defined contribution schemes
6,666
6,588
The company operates a defined contribution pension scheme for all qualifying employees. The assets of the scheme are held separately from those of the company in an independently administered fund.
21
Share capital
2024
2023
2024
2023
Ordinary share capital
Number
Number
£
£
Issued and fully paid
Ordinary shares of £1 each
2
2
2
2
22
Non-distributable profits reserve
2024
2023
£
£
At the beginning and end of the year
1,131,160
1,131,160
C R DOWN FARMING LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 JANUARY 2024
- 23 -
23
Operating lease commitments
Lessee
At the reporting end date the company had outstanding commitments for future minimum lease payments under non-cancellable operating leases, which fall due as follows:
2024
2023
£
£
Within one year
15,000
15,000
Between two and five years
53,750
68,750
68,750
83,750
Lessor
Leases are in place with third parties in connection with the company's investment properties. The leases include upwards only rent reviews based on the Retail Price Index.
At the reporting end date the company had contracted with tenants for the following minimum lease payments:
2024
2023
£
£
Within one year
219,258
201,094
Between two and five years
877,032
804,376
In over five years
1,680,978
1,759,573
2,777,268
2,765,043
24
Related party transactions
Transactions with related parties
During the year the company entered into the following transactions with related parties:
A loan continued to be provided by companies under common control. Interest was charged at 2.5% per annum. At the balance sheet date, the amount due to those companies was £3,532,119 (2023: £3,783,156).
These financial statements reflect costs totalling £7,466,951 and sales of £458,766 for goods and services supplied by and to partnerships of which the directors and shareholders of this company are also partners. The aggregate amount due from unincorporated entities under common control was £2,242,637 (2023: £1,882,567).
These financial statements reflect costs totalling £2,455,745 and sales of £123,644 for goods and services supplied by and to companies under common control. The aggregate amount due to these companies was £520,284 (2023: £237,679).
At the balance sheet date, interest free loan balances totalling £193,180 (2023: £93,180) were owed to the company directors.
C R DOWN FARMING LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 JANUARY 2024
- 24 -
25
Cash generated from operations
2024
2023
£
£
Profit for the year after tax
1,326,777
595,654
Adjustments for:
Taxation charged
159,277
166,288
Finance costs
222,638
183,596
Investment income
(354)
(21,346)
Gain on disposal of tangible fixed assets
(41,890)
-
Depreciation and impairment of tangible fixed assets
447,470
316,392
Movements in working capital:
Increase in stocks
(474,480)
(8,868)
Increase in debtors
(79,406)
(1,361,709)
(Decrease)/increase in creditors
(278,144)
971,688
Cash generated from operations
1,281,888
841,695
26
Analysis of changes in net debt
1 February 2023
Cash flows
New finance leases
31 January 2024
£
£
£
£
Bank overdrafts
(114,129)
(44,539)
-
(158,668)
Borrowings excluding overdrafts
(1,982,408)
70,752
-
(1,911,656)
Obligations under finance leases
(249,402)
265,255
(307,239)
(291,386)
(2,345,939)
291,468
(307,239)
(2,361,710)
27
Prior period adjustment
As disclosed in the Changes to Accounting Policies note, the company altered its livestock valuation method from deemed cost to actual cost. The method of valuing investment properties and the associated deferred tax cost has also been changed. The impact on the comparative year results and the company's brought forward equity position is as follows:-
C R DOWN FARMING LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 JANUARY 2024
27
Prior period adjustment
(Continued)
- 25 -
Reconciliation of changes in equity
1 February
31 January
2022
2023
£
£
Adjustments to prior year
Restatement of stock values
520,717
995,516
Deferred tax impact of above
(130,179)
(248,879)
Change to investment properties valuation
420,103
393,473
Deferred tax adjustment
(379,036)
(506,600)
Total adjustments
431,605
633,510
Equity as previously reported
2,046,197
2,439,946
Equity as adjusted
2,477,802
3,073,456
Analysis of the effect upon equity
Profit and loss reserves
431,605
633,510
Reconciliation of changes in profit for the previous financial period
2023
£
Adjustments to prior year
Restatement of stock values
474,799
Deferred tax impact of above
(118,700)
Change to investment properties valuation
(26,630)
Deferred tax adjustment
(127,564)
Total adjustments
201,905
Profit as previously reported
393,749
Profit as adjusted
595,654
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