Company registration number 00382248 (England and Wales)
MERCIA GARDEN PRODUCTS LIMITED
ANNUAL REPORT AND FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 AUGUST 2024
MERCIA GARDEN PRODUCTS LIMITED
COMPANY INFORMATION
Directors
Mr I Burgess
Mr R P Elliman
Mr G J M Rees
Mr T R Waldron
Mr J C Homewood
Mr D Berry
Company number
00382248
Registered office
Old Great North Road
Sutton-On-Trent
Newark
Nottinghamshire
NG23 6QN
Auditor
UHY Hacker Young
Bradbury House
Mission Court
Newport
Gwent
United Kingdom
NP20 2DW
MERCIA GARDEN PRODUCTS LIMITED
CONTENTS
Page
Strategic report
1 - 2
Directors' report
3 - 4
Independent auditor's report
5 - 7
Profit and loss account
8
Statement of comprehensive income
9
Balance sheet
10
Statement of changes in equity
11
Notes to the financial statements
12 - 23
MERCIA GARDEN PRODUCTS LIMITED
STRATEGIC REPORT
FOR THE YEAR ENDED 31 AUGUST 2024
- 1 -
Introduction
The directors present the strategic report for the year ended 31 August 2024.
Principal activities
The principal activity of the company during the year was the manufacture and distribution of timber garden products and the sale of factored goods associated with the garden leisure market.
Review of the business
Turnover for the year ended 31 August 2024 of £18.3m decreased by £4.5m (19.8%) compared with the year ended 31 August 2023.
Gross margin for the year ended 31 August 2024 was 36% (2023: 30.8%).
The closing cash reserve at 31 August 2024 decreased to £2.7m from £4.1m at the end of the 2023 year end.
Principal risks and uncertainties
The management of the business and the nature of the Company's strategy are subject to a number of risks. The directors have set out below the principal risks facing the business.
The directors are of the opinion that a thorough risk management process is adopted which involves the formal review of all the risks identified below. Where possible, processes are in place to monitor and mitigate such risks.
Economic downturn
The success of the business is reliant on consumer spending. An economic downturn, resulting in reduction of consumer spending power will have a direct impact on the income achieved by the Company.
In response to this risk, senior management aim to keep abreast of economic conditions. In cases of severe economic downturn, marketing and pricing strategies are modified to reflect the new market conditions.
Competition
The market in which the Company operates is competitive. It is imperative that we continue to meet our customers' expectations. Policies of constant price monitoring and ongoing market research are in place to mitigate such risks.
Fluctuations in currency exchange rates
Purchases are made from overseas. As a Company, we are therefore exposed to foreign currency fluctuations.
The Company manages its foreign exchange exposure on a net basis, and if required uses forward foreign exchange contracts and other financial instruments to reduce the exposure. In addition wherever possible we negotiate in sterling.
The hedging activity does not mitigate the exposure completely, and the results and the financial condition of the Company may be adversely impacted by foreign currency fluctuations.
Financial risk management objectives and policies
The Company uses various financial instruments including loans, cash and various items, such as trade debtors and trade creditors that arise directly from its operations. The main purpose of these financial instruments is to raise finance for the Company's operations.
The existence of these financial instruments exposes the Company to a number of financial risks, the main areas being currency risk, credit risk, liquidity risk and interest rate risk.
The directors review and agree policies for managing each of these risks and they are summarised below. These policies have remained unchanged from previous years.
MERCIA GARDEN PRODUCTS LIMITED
STRATEGIC REPORT (CONTINUED)
FOR THE YEAR ENDED 31 AUGUST 2024
- 2 -
Liquidity risk
The Company seeks to manage financial risk by ensuring sufficient liquidity is available to meet foreseeable needs and to invest cash assets safely and profitably. Short term flexibility is achieved by overdraft facilities.
Credit risk
The Company is exposed to credit risk by extending credit terms to customers. The risk is managed via credit insurance where considered necessary.
Currency risk
The Company's policy for managing currency risk is described above.
Mr I Burgess
Director
28 January 2025
MERCIA GARDEN PRODUCTS LIMITED
DIRECTORS' REPORT
FOR THE YEAR ENDED 31 AUGUST 2024
- 3 -
The directors present their annual report and financial statements for the year ended 31 August 2024.
Results and dividends
The results for the year are set out on page 8.
Ordinary dividends were paid amounting to £300,000. The directors do not recommend payment of a further dividend.
Directors
The directors who held office during the year and up to the date of signature of the financial statements were as follows:
Mr I Burgess
Mr R P Elliman
Mr G J M Rees
Mr T R Waldron
Mr J C Homewood
Mr D Berry
Qualifying third party indemnity provisions
The company has made qualifying third party indemnity provisions for the benefit of its directors during the year. These provisions remain in force at the reporting date.
Future developments
The period post-Covid has been challenging for the industry through a combination of weak market demand and input cost inflation, which have impacted on the company’s trading performance. However, market conditions are expected to improve and the Directors anticipate future growth and profitability based on the consistent delivery of the highest quality products and customer service.
Auditor
UHY Hacker Young were appointed as auditor to the company and in accordance with section 485 of the Companies Act 2006. UHY Hacker Young have expressed their willingness to continue in office as auditor and appropriate arrangements have been put in place for them to be deemed reappointed as auditor in the absence of an Annual 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.
MERCIA GARDEN PRODUCTS LIMITED
DIRECTORS' REPORT (CONTINUED)
FOR THE YEAR ENDED 31 AUGUST 2024
- 4 -
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.
Going concern
Trading and cash flows of the wider group post year-end remains strong. Forecasts for the 12 months ahead show the Group continuing to remain cash positive even when modelled using worst case scenarios.
The directors therefore consider it appropriate to use the going concern basis for the preparation of the financial statements.
Medium-sized companies exemption
This report has been prepared in accordance with the provisions applicable to companies entitled to the medium-sized companies exemption.
On behalf of the board
Mr I Burgess
Director
28 January 2025
MERCIA GARDEN PRODUCTS LIMITED
INDEPENDENT AUDITOR'S REPORT
TO THE MEMBER OF MERCIA GARDEN PRODUCTS LIMITED
- 5 -
Opinion
We have audited the financial statements of Mercia Garden Products Limited (the 'company') for the year ended 31 August 2024 which comprise the profit and loss account, the statement of comprehensive income, the balance sheet, the statement of changes in equity 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 August 2024 and of its loss 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.
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.
MERCIA GARDEN PRODUCTS LIMITED
INDEPENDENT AUDITOR'S REPORT
TO THE MEMBER OF MERCIA GARDEN PRODUCTS 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 below, 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.
Our approach to identifying and assessing the risks of material misstatement in respect of irregularities, including fraud and non-compliance with laws and regulations, was as follows:
the engagement partner ensured that the engagement team collectively had the appropriate competence, capabilities and skills to identify or recognise non-compliance with applicable laws and regulations;
we identified the laws and regulations applicable to the company through discussions with directors and other management, and from our commercial knowledge and experience of the relevant sector;
we focused on specific laws and regulations which we considered may have a direct material effect on the financial statements or the operations of the company, including the Companies Act 2006;
we assessed the extent of compliance with the laws and regulations identified above through making enquiries of management and inspecting legal correspondence; and
identified laws and regulations were communicated within the audit team regularly and the team remained alert to instances of non-compliance throughout the audit.
We assessed the susceptibility of the company's financial statements to material misstatement, including obtaining an understanding of how fraud might occur, by:
making enquiries of management as to where they considered there was susceptibility to fraud, their knowledge of actual, suspected and alleged fraud; and
considering the internal controls in place to mitigate risks of fraud and non-compliance with laws and regulations.
MERCIA GARDEN PRODUCTS LIMITED
INDEPENDENT AUDITOR'S REPORT
TO THE MEMBER OF MERCIA GARDEN PRODUCTS LIMITED (CONTINUED)
- 7 -
To address the risk of fraud through management bias and override of controls, we:
performed analytical procedures to identify any unusual or unexpected relationships;
tested journal entries to identify unusual transactions;
assessed whether judgements and assumptions made in determining the accounting estimates were indicative of potential bias; and
investigated the rationale behind significant or unusual transactions.
There are inherent limitations in our audit procedures described above. The more removed that laws and regulations are from financial statements, the less likely it is that we would become aware of non-compliance. Auditing standards also limit the audit procedures required to identify non-compliance with laws and regulations to enquiry of the directors and other management and the inspection of regulatory and legal correspondence, if any.
Material misstatements that arise due to fraud can be harder to detect than those that arise from error as they may involve deliberate concealment or collusion.
A further description of our responsibilities is available on the Financial Reporting Council’s website at: https://www.frc.org.uk/auditorsresponsibilities. This description forms part of our auditor's report.
This report is made solely to the company's member 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 member those matters we are required to state to the member 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 member, for our audit work, for this report, or for the opinions we have formed.
Mr John Griffiths
Senior Statutory Auditor
For and on behalf of UHY Hacker Young
28 January 2025
Chartered Accountants
Statutory Auditor
Newport
Gwent
United Kingdom
MERCIA GARDEN PRODUCTS LIMITED
PROFIT AND LOSS ACCOUNT
FOR THE YEAR ENDED 31 AUGUST 2024
- 8 -
2024
2023
Notes
£
£
Turnover
3
18,288,611
22,806,660
Cost of sales
(11,702,349)
(15,790,688)
Gross profit
6,586,262
7,015,972
Distribution costs
(4,192,485)
(4,383,657)
Administrative expenses
(2,938,100)
(3,672,228)
Exceptional admistrative costs
4
(182,522)
(363,468)
Operating loss
5
(726,845)
(1,403,381)
Interest receivable and similar income
8
108,339
52,579
Interest payable and similar expenses
9
(6,892)
(3,666)
Loss before taxation
(625,398)
(1,354,468)
Tax on loss
10
82,024
340,942
Loss for the financial year
(543,374)
(1,013,526)
The profit and loss account has been prepared on the basis that all operations are continuing operations.
MERCIA GARDEN PRODUCTS LIMITED
STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEAR ENDED 31 AUGUST 2024
- 9 -
2024
2023
£
£
Loss for the year
(543,374)
(1,013,526)
Other comprehensive income
-
-
Total comprehensive income for the year
(543,374)
(1,013,526)
MERCIA GARDEN PRODUCTS LIMITED
BALANCE SHEET
AS AT
31 AUGUST 2024
31 August 2024
- 10 -
2024
2023
as restated
Notes
£
£
£
£
Fixed assets
Tangible assets
12
3,603,684
3,784,070
Current assets
Stocks
13
4,750,914
3,921,446
Debtors
14
11,402,076
11,022,976
Cash at bank and in hand
2,708,902
4,103,676
18,861,892
19,048,098
Creditors: amounts falling due within one year
15
(12,008,385)
(11,571,060)
Net current assets
6,853,507
7,477,038
Total assets less current liabilities
10,457,191
11,261,108
Creditors: amounts falling due after more than one year
16
(2,221)
Net assets
10,457,191
11,258,887
Capital and reserves
Called up share capital
20
37,500
37,500
Revaluation reserve
2,218,860
2,218,860
Profit and loss reserves
8,200,831
9,002,527
Total equity
10,457,191
11,258,887
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 28 January 2025 and are signed on its behalf by:
Mr I Burgess
Director
Company registration number 00382248 (England and Wales)
MERCIA GARDEN PRODUCTS LIMITED
STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 AUGUST 2024
- 11 -
Share capital
Revaluation reserve
Profit and loss reserves
Total
Notes
£
£
£
£
As restated for the period ended 31 August 2023:
Balance at 1 September 2022
37,500
2,218,860
10,173,310
12,429,670
Effect of prior year adjustment
26
-
104,964
104,964
As restated
37,500
2,218,860
10,278,274
12,534,634
Year ended 31 August 2023:
Loss and total comprehensive income
-
-
(1,013,526)
(1,013,526)
Dividends
11
-
-
(300,000)
(300,000)
Credit to equity for equity settled share-based payments
-
-
37,779
37,779
Balance at 31 August 2023
37,500
2,218,860
9,002,527
11,258,887
Year ended 31 August 2024:
Loss and total comprehensive income
-
-
(543,374)
(543,374)
Dividends
11
-
-
(300,000)
(300,000)
Credit to equity for equity settled share-based payments
-
-
41,678
41,678
Balance at 31 August 2024
37,500
2,218,860
8,200,831
10,457,191
The revaluation reserve includes historic gains and losses on the revaluation of land and buildings.
The profit and loss reserve represents cumulative profits or losses, net of dividends paid and other adjustments.
MERCIA GARDEN PRODUCTS LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 AUGUST 2024
- 12 -
1
Accounting policies
Company information
Mercia Garden Products Limited is a private company limited by shares incorporated in England and Wales. The registered office is Old Great North Road, Sutton-On-Trent, Newark, Nottinghamshire, NG23 6QN.
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 the revaluation of freehold properties and to include certain financial instruments at fair value. The principal accounting policies adopted are set out below.
This company is a qualifying entity for the purposes of FRS 102, being a member of a group where the parent of that group prepares publicly available consolidated financial statements, including this company, which are intended to give a true and fair view of the assets, liabilities, financial position and profit or loss of the group. The company has therefore taken advantage of exemptions from the following disclosure requirements:
Section 7 ‘Statement of Cash Flows’: Presentation of a statement of cash flow and related notes and disclosures;
Section 11 ‘Basic Financial Instruments’ and Section 12 ‘Other Financial Instrument Issues: Interest income/expense and net gains/losses for financial instruments not measured at fair value; basis of determining fair values; details of collateral, loan defaults or breaches, details of hedges, hedging fair value changes recognised in profit or loss and in other comprehensive income;
Section 26 ‘Share based Payment’: Share-based payment expense charged to profit or loss, reconciliation of opening and closing number and weighted average exercise price of share options, how the fair value of options granted was measured, measurement and carrying amount of liabilities for cash-settled share-based payments, explanation of modifications to arrangements;
Section 33 ‘Related Party Disclosures’: Compensation for key management personnel.
The financial statements of the company are consolidated in the financial statements of The Garden Buildings Group Limited. These consolidated financial statements are available from its registered office, Mercia Garden Products Old Great North Road, Sutton-On-Trent, Newark, Nottinghamshire, United Kingdom.
1.2
Going concern
Trading and cash flow of the wider group post yeartrue-end remains strong. Forecasts for the12 months ahead show the Group continuing to remain cash positive even when modelled using worst case scenarios.
At the time of approving the financial statements, the directors have a reasonable expectation that the company has adequate resources to continue in operational existence for the foreseeable future. Thus the directors continue to adopt the going concern basis of accounting in preparing the financial statements.
1.3
Turnover
Turnover is recognised at the fair value of the consideration received or receivable for goods 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.
MERCIA GARDEN PRODUCTS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 AUGUST 2024
1
Accounting policies
(Continued)
- 13 -
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 land and buildings
2% straight line
Plant and equipment
25% straight line
Motor vehicles
25-33% straight line
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.
1.5
Impairment of fixed assets
At each reporting period end date, the company reviews the carrying amounts of its tangible assets to determine whether there is any indication that those assets have suffered an impairment loss. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment loss (if any). Where it is not possible to estimate the recoverable amount of an individual asset, the company estimates the recoverable amount of the cash-generating unit to which the asset belongs.
Recoverable amount is the higher of fair value less costs to sell and value in use. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset for which the estimates of future cash flows have not been adjusted.
If the recoverable amount of an asset (or cash-generating unit) is estimated to be less than its carrying amount, the carrying amount of the asset (or cash-generating unit) is reduced to its recoverable amount. An impairment loss is recognised immediately in profit or loss, unless the relevant asset is carried at a revalued amount, in which case the impairment loss is treated as a revaluation decrease.
Recognised impairment losses are reversed if, and only if, the reasons for the impairment loss have ceased to apply. Where an impairment loss subsequently reverses, the carrying amount of the asset (or cash-generating unit) is increased to the revised estimate of its recoverable amount, but so that the increased carrying amount does not exceed the carrying amount that would have been determined had no impairment loss been recognised for the asset (or cash-generating unit) in prior years. A reversal of an impairment loss is recognised immediately in profit or loss, unless the relevant asset is carried at a revalued amount, in which case the reversal of the impairment loss is treated as a revaluation increase.
1.6
Stocks
Stocks are stated at the lower of cost and estimated selling price less costs to complete and sell. Cost comprises direct materials and, where applicable, direct labour costs and those overheads that have been incurred in bringing the stocks to their present location and condition.
Stocks held for distribution at no or nominal consideration are measured at the lower of cost and replacement cost, adjusted where applicable for any loss of service potential.
At each reporting date, an assessment is made for impairment. Any excess of the carrying amount of stocks over its estimated selling price less costs to complete and sell is recognised as an impairment loss in profit or loss. Reversals of impairment losses are also recognised in profit or loss.
MERCIA GARDEN PRODUCTS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 AUGUST 2024
1
Accounting policies
(Continued)
- 14 -
1.7
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.
1.8
Financial instruments
The company has elected to apply the provisions of Section 11 ‘Basic Financial Instruments’ and Section 12 ‘Other Financial Instruments Issues’ of FRS 102 to all of its financial instruments.
Financial instruments are recognised in the company's 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.
Debtors and creditors with no stated interest rate and receivable or payable within one year are recorded at transaction price. Any losses arising from impairment are recognised in the profit and loss account in other administrative expenses.
1.9
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.
1.10
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.
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.
MERCIA GARDEN PRODUCTS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 AUGUST 2024
1
Accounting policies
(Continued)
- 15 -
1.11
Retirement benefits
Payments to defined contribution retirement benefit schemes are charged as an expense as they fall due.
1.12
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.
2
Judgements and key sources of estimation uncertainty
In the application of the company’s accounting policies, the directors are required to make judgements, estimates and assumptions about the carrying amount of assets and liabilities that are not readily apparent from other sources. The estimates and associated assumptions are based on historical experience and other factors that are considered to be relevant. Actual results may differ from these estimates.
The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised where the revision affects only that period, or in the period of the revision and future periods where the revision affects both current and future periods.
Key sources of estimation uncertainty
The estimates and assumptions which have a significant risk of causing a material adjustment to the carrying amount of assets and liabilities are as follows.
Depreciation
The Company exercises judgement to determine useful lives and residual values of tangible fixed assets which are depreciated on a straight line basis. The assets are depreciated down to their residual values over their estimated useful lives. Management considers that the carrying value of tangible fixed assets is reasonable and therefore that no impairment charge is required in the current year.
Provisions
Provisions have been made for trade debtors and stock obsolescence. These provisions are an estimate of the actual costs, and the timing of future cash flows is dependent on future events. The difference between expectations and the actual future liability will be accounted for in the period when such determination is made.
Carrying value of land and buildings
Historically land and buildings have been accounted for under revaluation model, with the most recent valuation performed in May 2015. As in the prior period management has elected to treat this revalued amount as the deemed cost of the asset at transition to FRS 102 in line with other group companies.
Recoverability of intercompany balances
The carrying value of amounts owed by group undertakings at the balance sheet date was £8,307,878 (2023: £7,740,725). Balances are assessed for indicators of impairment at each balance sheet date. If there is objective evidence of impairment, an impairment loss is recognised in profit and loss account. The impairment loss is the difference between the asset’s carrying amount and the best estimate of the recoverable amount at the reporting date. Impairment losses of £nil (2023: £nil) were recognised in the year.
3
Turnover and other revenue
MERCIA GARDEN PRODUCTS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 AUGUST 2024
3
Turnover and other revenue
(Continued)
- 16 -
2024
2023
£
£
Other revenue
Interest income
108,339
52,579
All turnover relates to the principle activity of the company and arose from the United Kingdom.
4
Exceptional item
2024
2023
£
£
Expenditure
Restructuring costs
182,522
363,468
5
Operating loss
2024
2023
Operating loss for the year is stated after charging/(crediting):
£
£
Exchange gains
(8,637)
(7,461)
Fees payable to the company's auditor for the audit of the company's financial statements
32,000
34,800
Depreciation of owned tangible fixed assets
346,819
360,116
Depreciation of tangible fixed assets held under finance leases
26,659
19,992
6
Employees
The average monthly number of persons (including directors) employed by the company during the year was:
2024
2023
Number
Number
Production
69
77
Selling and distribution
63
76
Administration
22
24
Total
154
177
MERCIA GARDEN PRODUCTS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 AUGUST 2024
6
Employees
(Continued)
- 17 -
Their aggregate remuneration comprised:
2024
2023
£
£
Wages and salaries
5,009,403
5,560,795
Social security costs
450,331
475,674
Pension costs
120,244
124,413
5,579,978
6,160,882
Wages and salaries above includes a share based payment charge of £41,678 (2023: £37,779) that has been recharged from the ultimate parent company, The Garden Buildings Group Limited.
7
Directors' remuneration
2024
2023
£
£
Remuneration for qualifying services
346,633
357,266
Company pension contributions to defined contribution schemes
20,890
22,376
367,523
379,642
The number of directors for whom retirement benefits are accruing under defined contribution schemes amounted to 4 (2023 - 4).
Remuneration disclosed above include the following amounts paid to the highest paid director:
2024
2023
£
£
Remuneration for qualifying services
123,883
125,203
Company pension contributions to defined contribution schemes
11,550
11,000
8
Interest receivable and similar income
2024
2023
£
£
Interest income
Interest on bank deposits
108,339
52,579
9
Interest payable and similar expenses
2024
2023
£
£
Interest on bank overdrafts and loans
6,892
3,666
MERCIA GARDEN PRODUCTS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 AUGUST 2024
- 18 -
10
Taxation
2024
2023
£
£
Current tax
Adjustments in respect of prior periods
(217,835)
(326,897)
Deferred tax
Origination and reversal of timing differences
(151,658)
(242,808)
Adjustment in respect of prior periods
287,469
228,763
Total deferred tax
135,811
(14,045)
Total tax credit
(82,024)
(340,942)
The actual credit for the year can be reconciled to the expected credit for the year based on the profit or loss and the standard rate of tax as follows:
2024
2023
£
£
Loss before taxation
(625,398)
(1,354,468)
Expected tax credit based on the standard rate of corporation tax in the UK of 25.00% (2023: 21.52%)
(156,350)
(291,482)
Tax effect of expenses that are not deductible in determining taxable profit
4,692
23,339
Adjustments in respect of prior years
(217,835)
(326,897)
Effect of change in corporation tax rate
(33,847)
Other permanent differences
650
Deferred tax adjustments in respect of prior years
287,469
228,763
Fixed asset differences
58,532
Taxation credit for the year
(82,024)
(340,942)
11
Dividends
2024
2023
£
£
Final paid
300,000
300,000
MERCIA GARDEN PRODUCTS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 AUGUST 2024
- 19 -
12
Tangible fixed assets
Freehold land and buildings
Plant and equipment
Motor vehicles
Total
£
£
£
£
Cost
At 1 September 2023
3,466,138
6,996,507
46,164
10,508,809
Additions
258
174,343
18,491
193,092
At 31 August 2024
3,466,396
7,170,850
64,655
10,701,901
Depreciation and impairment
At 1 September 2023
132,841
6,545,734
46,164
6,724,739
Depreciation charged in the year
16,524
354,727
2,227
373,478
At 31 August 2024
149,365
6,900,461
48,391
7,098,217
Carrying amount
At 31 August 2024
3,317,031
270,389
16,264
3,603,684
At 31 August 2023
3,333,297
450,773
3,784,070
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
£
£
Computers
26,659
The company adopted the transitional provisions under FRS 102 to treat the revalued amounts of land & buildings as deemed cost. Land & buildings were professionally valued to £3,735,500 on 9 May 2015 when the historical cost was £1,604,725.
13
Stocks
2024
2023
£
£
Raw materials and consumables
2,391,606
1,440,487
Work in progress
627,409
756,145
Finished goods and goods for resale
1,731,899
1,724,814
4,750,914
3,921,446
Stocks are stated after impairment provisions of £76,427 (2023: £94,048).
MERCIA GARDEN PRODUCTS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 AUGUST 2024
- 20 -
14
Debtors
2024
2023
Amounts falling due within one year:
£
£
Trade debtors
2,308,784
2,364,630
Corporation tax recoverable
217,835
455,060
Amounts owed by group undertakings
8,524,985
7,740,725
Other debtors
(4,477)
Prepayments and accrued income
304,815
276,616
11,351,942
10,837,031
Deferred tax asset (note 18)
50,134
185,945
11,402,076
11,022,976
Trade debtors are stated after impairment provisions of £nil (2023: £96,758).
The amounts owed by group undertakings are interest free, unsecured and are repayable on demand.
15
Creditors: amounts falling due within one year
2024
2023
as restated
Notes
£
£
Obligations under finance leases
17
8,331
24,882
Trade creditors
1,701,101
766,943
Amounts owed to group undertakings
8,298,942
8,083,816
Taxation and social security
452,806
653,072
Other creditors
429,776
344,742
Accruals and deferred income
1,117,429
1,697,605
12,008,385
11,571,060
The amounts owed by group undertakings are interest free, unsecured and are repayable on demand.
16
Creditors: amounts falling due after more than one year
2024
2023
Notes
£
£
Obligations under finance leases
17
2,221
MERCIA GARDEN PRODUCTS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 AUGUST 2024
- 21 -
17
Finance lease obligations
2024
2023
Future minimum lease payments due under finance leases:
£
£
Within one year
8,331
24,882
In two to five years
2,221
8,331
27,103
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 1 year. All leases are on a fixed repayment basis and no arrangements have been entered into for contingent rental payments.
18
Deferred taxation
The following are the major deferred tax liabilities and assets recognised by the company and movements thereon:
Assets
Assets
2024
2023
Balances:
£
£
Accelerated capital allowances
(92,277)
(120,537)
Tax losses
137,548
291,565
Other
4,863
14,917
50,134
185,945
2024
Movements in the year:
£
Asset at 1 September 2023
(185,945)
Charge to profit or loss
135,811
Asset at 31 August 2024
(50,134)
The deferred tax asset set out above is expected to reverse and relates to the utilisation of tax losses against future expected profits of the same period.
19
Retirement benefit schemes
2024
2023
Defined contribution schemes
£
£
Charge to profit or loss in respect of defined contribution schemes
120,244
124,413
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.
MERCIA GARDEN PRODUCTS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 AUGUST 2024
19
Retirement benefit schemes
(Continued)
- 22 -
Contributions totalling £22,472 (2023: £19,669) were payable to the fund at the reporting date and are included in creditors.
20
Share capital
2024
2023
2024
2023
Ordinary share capital
Number
Number
£
£
Issued and fully paid
Ordinary shares of £1 each
37,500
37,500
37,500
37,500
All shares have equal voting rights. There are no restrictions on dividends and the repayment of capital.
21
Financial commitments, guarantees and contingent liabilities
The Company has provided a debenture to HSBC UK Bank plc that secures the bank's borrowings over the company's assets. At 31 August 2024 there were no borrowings (2023: £nil).
22
Operating lease commitments
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
463,939
208,003
Between two and five years
1,048,302
464,035
1,512,241
672,038
23
Capital commitments
Amounts contracted for but not provided in the financial statements:
2024
2023
£
£
Acquisition of tangible fixed assets
14,080
-
MERCIA GARDEN PRODUCTS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 AUGUST 2024
- 23 -
24
Related party transactions
The Company has taken advantage of the exemption under FRS 102 from disclosing transactions with other wholly group companies that are part of The Garden Buildings Group Limited group.
Directors I Burgess and G J M Rees are directors of, and have interests in Branded Garden Products Limited. Transactions took place between Mercia Garden Products Limited and Branded Garden Products Limited during the year ended 31 August 2024.
Mercia Garden Products Limited purchased goods from Branded Garden Products Limited to the value of £911 (2023: £10,300). At 31 August 2024 Mercia Garden Products Limited owed Branded Garden Products Limited £374 (2023: £360).
Mercia Garden Products Limited sold goods to Branded Garden Products Limited to the value of £nil (2023: £1,500).
Mercia Garden Products Limited paid management fees to BGF Investment Management Limited to the value of £12,668 (2023: £24,800). At 31 August 2024 Mercia Garden Products Limited owed BGF Investment ,Management Limited £nil (2023: £7,601).
25
Ultimate controlling party
The immediate parent company of Mercia Garden Products Limited is Rosimian Limited, incorporated in the United Kingdom. The ultimate parent company is The Garden Buildings Group Limited. The Garden Buildings Group Limited is the parent undertaking of the smallest and largest group which includes the company for which group financial statements are prepared. Copies of the group financial statements of The Garden Buildings Group Limited are available from the registered office; Mercia Garden Products Old Great North Road, Sutton-On-Trent, Newark, Nottinghamshire, United Kingdom.
There is no ultimate controlling party.
26
Prior period adjustment
In 2022 the company created a share-based payments provision in relation to C Ordinary and D Ordinary shares issued to certain employees. The company has correctly recognised the fair value of the share issue as a share-based payment expense in the Profit & Loss account however as this is not a liability that the company will have to settle, the expense should have been reflected not as a liability but as a credit to Profit & Loss reserves. The prior year adjustment represents the £104,964 liability recognised in 2022 and the additional £37,779 liability recognised in 2023, which make up the total liability reported of £142,743 at 31 August 2023.
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