Company registration number 05609215 (England and Wales)
HANOVER DAIRIES LIMITED
ANNUAL REPORT AND FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MAY 2024
HANOVER DAIRIES LIMITED
COMPANY INFORMATION
Directors
T A Hanover
V M Hanover
R Hanover
J Fitzgibbon
M Hanover
AD Baldwin
P Doran
JF Fitzgibbon
Secretary
V M Hanover
Company number
05609215
Registered office
Unit 2 Blaydon Park
Chainbridge Road
Blaydon
Tyne & Wear
England
NE21 5ST
Auditor
Sumer Auditco Limited
Unit 2
Gosforth Park Avenue
Newcastle Upon Tyne
NE12 8EG
HANOVER DAIRIES LIMITED
CONTENTS
Page
Strategic report
1
Directors' report
2 - 3
Independent auditor's report
4 - 6
Profit and loss account
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
The following pages do not form part of the statutory financial statements
Detailed profit and loss account
26 - 28
HANOVER DAIRIES LIMITED
STRATEGIC REPORT
FOR THE YEAR ENDED 31 MAY 2024
- 1 -
The directors present the strategic report for the year ended 31 May 2024.
Principal activities
The principal activity of the company continued to be that of wholesale and doorstep milk deliveries.
Fair review of the business
Operating costs remained high in the financial year. The company continued with its rationalisation of projects and pricing structure to improve the company’s position.
The company is assessing the Government's announcements on business rate increases and will be looking at avenues to mitigate these, with the year ahead looking to be a challenging one.
The Directors are proud of the workforce in their dedicated efforts during another challenging period.
The company continues to invest in the marketing strategy of responsible packaging and its environmental benefits to help increase sales and gross profit.
The turnover has increased by £1,268,424 (6.8%) to £19,804,764 (2023 - £18,536,340) and the gross profit margin continues to be strong at 47.9% (2023 - 37.3%). The turnover and gross margin remain key performance indicators and the directors are optimistic that the company continues to strengthen its position by closely monitoring these measures.
The directors are also pleased to have once again strengthened the balance sheet. The total net assets as at reporting date are £2,625,451 (2023 - £2,546,199).
Principal risks and uncertainties
The management of the business and the execution of the company's strategy are subject to a number of other risks. The board reviews these risks and puts in place policies to mitigate them. The key business and financial risks are:
Employees
The company understands the effect that the loss of key employees may have on the business and therefore provides competitive pay conditions to all its employees.
Environment, health and safety incidents
Appropriate measures are implemented to ensure the risk of any environmental and health and safety issues are minimised.
Liquidity risk
The directors regularly monitor the financial information to ensure that any risks in this area are considered on a timely basis.
Inflation risk
The directors regularly monitor and strategically plan for cost increases on products and utilities.
R Hanover
Director
Approved by the board on 24 February 2025
HANOVER DAIRIES LIMITED
DIRECTORS' REPORT
FOR THE YEAR ENDED 31 MAY 2024
- 2 -
The directors present their annual report and financial statements for the year ended 31 May 2024.
Results and dividends
The results for the year are set out on page 7.
Ordinary dividends were paid amounting to £838,850. 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:
T A Hanover
V M Hanover
R Hanover
J Fitzgibbon
M Hanover
AD Baldwin
P Doran
JF Fitzgibbon
Auditor
In accordance with the company's articles, a resolution proposing that Sumer Auditco Limited be reappointed as auditor of the company 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.
Strategic report
The company has chosen in accordance with Companies Act 2006, s. 414C(11) to set out in the company's strategic report information required by Large and Medium-sized Companies and Groups (Accounts and Reports) Regulations 2008, Sch. 7 to be contained in the Directors' report.
HANOVER DAIRIES LIMITED
DIRECTORS' REPORT (CONTINUED)
FOR THE YEAR ENDED 31 MAY 2024
- 3 -
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.
On behalf of the board
R Hanover
Director
24 February 2025
HANOVER DAIRIES LIMITED
INDEPENDENT AUDITOR'S REPORT
TO THE MEMBERS OF HANOVER DAIRIES LIMITED
- 4 -
Opinion
We have audited the financial statements of Hanover Dairies Limited (the 'company') for the year ended 31 May 2024 which comprise the profit and loss account, 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 May 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.
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.
HANOVER DAIRIES LIMITED
INDEPENDENT AUDITOR'S REPORT
TO THE MEMBERS OF HANOVER DAIRIES LIMITED (CONTINUED)
- 5 -
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. The extent to which our procedures are capable of detecting irregularities, including fraud, is detailed below.
HANOVER DAIRIES LIMITED
INDEPENDENT AUDITOR'S REPORT
TO THE MEMBERS OF HANOVER DAIRIES LIMITED (CONTINUED)
- 6 -
Capability of the audit in detecting irregularities, including fraud
Discussions with and enquiries of management and those charged with governance were held with a view to identifying those laws and regulations that could be expected to have a material impact on the financial statements. During the engagement team briefing, the outcomes of these discussions and enquiries were shared with the team, as well as consideration as to where and how fraud may occur in the entity.
The following laws and regulations were identified as being of significance to the entity:
Audit procedures undertaken in response to the potential risks relating to irregularities (which include fraud and non-compliance with laws and regulations) comprised of: inquiries of management and those charged with governance as to whether the entity complies with such laws and regulations; enquiries with the same concerning any actual or potential litigation or claims; testing the appropriateness of journal entries; and the performance of analytical review to identify unexpected movements in account balances which may be indicative of fraud.
No instances of material non-compliance were identified. However, the likelihood of detecting irregularities, including fraud, is limited by the inherent difficulty in detecting irregularities, the effectiveness of the entity's controls, and the nature, timing and extent of the audit procedures performed. Irregularities that result from fraud might be inherently more difficult to detect than irregularities that result from error. As explained above, there is an unavoidable risk that material misstatements may not be detected, even though the audit has been planned and performed in accordance with ISAs (UK).
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.
Stephen Slater
Senior Statutory Auditor
For and on behalf of Sumer Auditco Limited
Statutory Auditor
Unit 2
Gosforth Park Avenue
Newcastle Upon Tyne
NE12 8EG
25 February 2025
HANOVER DAIRIES LIMITED
PROFIT AND LOSS ACCOUNT
FOR THE YEAR ENDED 31 MAY 2024
- 7 -
2024
2023
Notes
£
£
Turnover
3
19,804,764
18,536,340
Cost of sales
(10,328,581)
(11,621,683)
Gross profit
9,476,183
6,914,657
Administrative expenses
(8,159,831)
(6,610,817)
Operating profit
4
1,316,352
303,840
Interest receivable and similar income
27,442
14,506
Interest payable and similar expenses
8
(109,480)
(118,536)
Profit before taxation
1,234,314
199,810
Tax on profit
9
(316,212)
(36,297)
Profit for the financial year
918,102
163,513
The profit and loss account has been prepared on the basis that all operations are continuing operations.
HANOVER DAIRIES LIMITED
STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEAR ENDED 31 MAY 2024
- 8 -
2024
2023
£
£
Profit for the year
918,102
163,513
Other comprehensive income
-
-
Total comprehensive income for the year
918,102
163,513
HANOVER DAIRIES LIMITED
BALANCE SHEET
AS AT 31 MAY 2024
31 May 2024
- 9 -
2024
2023
Notes
£
£
£
£
Fixed assets
Goodwill
11
95,711
47,944
Tangible assets
12
2,302,701
2,170,386
2,398,412
2,218,330
Current assets
Stocks
13
27,343
41,143
Debtors
14
4,598,416
4,322,573
Cash at bank and in hand
2,256
46,943
4,628,015
4,410,659
Creditors: amounts falling due within one year
15
(3,179,454)
(2,849,689)
Net current assets
1,448,561
1,560,970
Total assets less current liabilities
3,846,973
3,779,300
Creditors: amounts falling due after more than one year
16
(715,403)
(782,933)
Provisions for liabilities
Deferred tax liability
19
506,119
450,168
(506,119)
(450,168)
Net assets
2,625,451
2,546,199
Capital and reserves
Called up share capital
21
1,003
1,003
Profit and loss reserves
2,624,448
2,545,196
Total equity
2,625,451
2,546,199
The financial statements were approved by the board of directors and authorised for issue on 24 February 2025 and are signed on its behalf by:
R Hanover
Director
Company registration number 05609215 (England and Wales)
HANOVER DAIRIES LIMITED
STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 MAY 2024
- 10 -
Share capital
Profit and loss reserves
Total
Notes
£
£
£
Balance at 1 June 2022
1,003
3,028,033
3,029,036
Year ended 31 May 2023:
Profit and total comprehensive income
-
163,513
163,513
Dividends
10
-
(646,350)
(646,350)
Balance at 31 May 2023
1,003
2,545,196
2,546,199
Year ended 31 May 2024:
Profit and total comprehensive income
-
918,102
918,102
Dividends
10
-
(838,850)
(838,850)
Balance at 31 May 2024
1,003
2,624,448
2,625,451
HANOVER DAIRIES LIMITED
STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED 31 MAY 2024
- 11 -
2024
2023
Notes
£
£
£
£
Cash flows from operating activities
Cash generated from operations
27
1,779,720
1,443,042
Interest paid
(109,480)
(118,536)
Income taxes (paid)/refunded
(153,906)
133,976
Net cash inflow from operating activities
1,516,334
1,458,482
Investing activities
Purchase of intangible assets
(68,250)
(23,446)
Proceeds from disposal of intangibles
23,000
Purchase of tangible fixed assets
(107,053)
(565,870)
Proceeds from disposal of tangible fixed assets
137,699
256,425
Repayment of loans
6,660
770
Interest received
27,442
14,506
Net cash used in investing activities
(3,502)
(294,615)
Financing activities
Repayment of bank loans
(36,029)
(64,453)
Payment of finance leases obligations
(605,567)
(399,070)
Dividends paid
(838,850)
(646,350)
Net cash used in financing activities
(1,480,446)
(1,109,873)
Net increase in cash and cash equivalents
32,386
53,994
Cash and cash equivalents at beginning of year
(480,414)
(534,408)
Cash and cash equivalents at end of year
(448,028)
(480,414)
Relating to:
Cash at bank and in hand
2,256
46,943
Bank overdrafts included in creditors payable within one year
(450,284)
(527,357)
HANOVER DAIRIES LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MAY 2024
- 12 -
1
Accounting policies
Company information
Hanover Dairies Limited is a private company limited by shares incorporated in England and Wales. The registered office is Unit 2 Blaydon Park, Chainbridge Road, Blaydon, Tyne & Wear, England, NE21 5ST.
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. 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 represents invoiced sales of milk, ancillary products and commission, excluding value added tax. Revenue is recognised on delivery of the milk and ancillary products provided in the normal course of business.
1.4
Intangible fixed assets - goodwill
Acquired goodwill is written off in equal annual instalments over its estimated economical useful life of five years, unless the goodwill purchased has fallen below the net realisable value. In which case it is written down to the net realisable value.
1.5
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:
Plant and machinery
10% reducing balance & 33.33% straight line
Motor vehicles
20% reducing balance
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.
1.6
Stocks
Stocks are stated at the lower of cost and estimated selling price less costs to complete and sell.
HANOVER DAIRIES LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 MAY 2024
1
Accounting policies
(Continued)
- 13 -
1.7
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.
Impairment of financial assets
Financial assets, other than those held at fair value through profit and loss, are assessed for indicators of impairment at each reporting end date.
Financial assets are impaired where there is objective evidence that, as a result of one or more events that occurred after the initial recognition of the financial asset, the estimated future cash flows have been affected. If an asset is impaired, the impairment loss is the difference between the carrying amount and the present value of the estimated cash flows discounted at the asset’s original effective interest rate. The impairment loss is recognised in profit or loss.
If there is a decrease in the impairment loss arising from an event occurring after the impairment was recognised, the impairment is reversed. The reversal is such that the current carrying amount does not exceed what the carrying amount would have been, had the impairment not previously been recognised. The impairment reversal is recognised in profit or loss.
Derecognition of financial assets
Financial assets are derecognised only when the contractual rights to the cash flows from the asset expire or are settled, or when the company transfers the financial asset and substantially all the risks and rewards of ownership to another entity, or if some significant risks and rewards of ownership are retained but control of the asset has transferred to another party that is able to sell the asset in its entirety to an unrelated third party.
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.
HANOVER DAIRIES LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 MAY 2024
1
Accounting policies
(Continued)
- 14 -
Basic financial liabilities
Basic financial liabilities, including creditors, bank loans and loans from fellow group companies, are initially recognised at transaction price unless the arrangement constitutes a financing transaction, where the debt instrument is measured at the present value of the future payments discounted at a market rate of interest. Financial liabilities classified as payable within one year are not amortised.
Debt instruments are subsequently carried at amortised cost, using the effective interest rate method.
Trade creditors are obligations to pay for goods or services that have been acquired in the ordinary course of business from suppliers. Amounts payable are classified as current liabilities if payment is due within one year or less. If not, they are presented as non-current liabilities. Trade creditors are recognised initially at transaction price and subsequently measured at amortised cost using the effective interest method.
Derecognition of financial liabilities
Financial liabilities are derecognised when the company’s contractual obligations expire or are discharged or cancelled.
1.8
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.
1.9
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.
Where the cost of any unused holiday entitlement is considered to be material to the financial statements, it 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.
HANOVER DAIRIES LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 MAY 2024
1
Accounting policies
(Continued)
- 15 -
1.10
Retirement benefits
Payments to defined contribution retirement benefit schemes are charged as an expense as they fall due.
1.11
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.
Rentals payable under operating leases, including any lease incentives received, are charged to profit or loss on a straight line basis over the term of the relevant lease except where another more systematic basis is more representative of the time pattern in which economic benefits from the leases asset are consumed.
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.
Critical judgements
The following judgements (apart from those involving estimates) have had the most significant effect on amounts recognised in the financial statements.
Assessing indicators of impairment
In assessing whether there have been any indicators of impairment in assets, the directors have considered both external and internal sources of information such as market conditions and experience of recoverability. There have been no indicators of impairments identified during the current financial year.
HANOVER DAIRIES LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 MAY 2024
2
Judgements and key sources of estimation uncertainty
(Continued)
- 16 -
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.
Determining residual values and useful econmic lives of fixed assets and goodwill
The company depreciate tangible assets and amortise goodwill over their estimated useful lives. The estimation of the useful lives of assets is based on historic performance as well as expectations about future use and therefore requires estimates and assumptions to be applied by management.
Judgement is applied by management when determining the residual values of tangible assets and goodwill. When determining the residual value management aim to assess the amount that the company would currently obtain for the disposal of the asset, if it were already of the condition expected at the end of its useful economic life.
The carrying amount of goodwill at the reporting date was £95,711 (2023 - £47,944) and the carrying amount of tangible fixed assets at the reporting date was £2,302,701 (2023 - £2,170,386).
Recoverability of debtors
The company establishes a provision for debtors that are estimated not to be recoverable. When assessing recoverability the directors consider factors such as the ageing of the debtors, past experience of recoverability, and the credit profile of individual or groups of customers. The carrying value of this provision at year end was £139,752 (2023 - £17,552).
3
Turnover and other revenue
2024
2023
£
£
Turnover analysed by class of business
Sales of milk
19,804,764
18,536,340
Turnover was supplied to markets wholly within the UK.
4
Operating profit
2024
2023
Operating profit for the year is stated after charging/(crediting):
£
£
Depreciation of owned tangible fixed assets
459,474
462,158
Profit on disposal of tangible fixed assets
(6,734)
(91,515)
Amortisation of intangible assets
20,483
20,863
Profit on disposal of intangible assets
-
(23,000)
Operating lease charges
188,156
307,077
5
Auditor's remuneration
2024
2023
Fees payable to the company's auditor and associates:
£
£
For audit services
Audit of the financial statements of the company
13,125
12,500
HANOVER DAIRIES LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 MAY 2024
- 17 -
6
Employees
The average monthly number of persons (including directors) employed by the company during the year was:
2024
2023
Number
Number
Depot & distribution
93
75
Administration
27
17
Directors
8
8
Total
128
100
Their aggregate remuneration comprised:
2024
2023
£
£
Wages and salaries
3,808,238
3,054,893
Social security costs
366,636
292,181
Pension costs
100,788
80,697
4,275,662
3,427,771
7
Directors' remuneration
2024
2023
£
£
Remuneration for qualifying services
553,582
575,914
Company pension contributions to defined contribution schemes
8,750
-
562,332
575,914
Remuneration disclosed above include the following amounts paid to the highest paid director:
2024
2023
£
£
Remuneration for qualifying services
155,251
157,287
HANOVER DAIRIES LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 MAY 2024
- 18 -
8
Interest payable and similar expenses
2024
2023
£
£
Interest on financial liabilities measured at amortised cost:
Interest on bank overdrafts and loans
27,907
31,085
Other finance costs:
Interest on finance leases and hire purchase contracts
81,573
87,451
109,480
118,536
9
Taxation
2024
2023
£
£
Current tax
UK corporation tax on profits for the current period
260,261
Deferred tax
Origination and reversal of timing differences
55,951
36,297
Total tax charge
316,212
36,297
The main rate of corporation tax increased to 25% from 1 April 2023 under the Finance Bill 2021. Deferred tax has been provided at the rates expected to be in place when the timing differences reverse. A marginal rate of 20% was used for the year to 31 May 2023 when assessing the corporation tax charge as below.
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
1,234,314
199,810
Expected tax charge based on the standard rate of corporation tax in the UK of 25.00% (2023: 20.00%)
308,579
39,962
Tax effect of expenses that are not deductible in determining taxable profit
776
4,885
Tax effect of income not taxable in determining taxable profit
(21,984)
Effect of change in corporation tax rate
7,256
Other
6,857
6,178
Taxation charge for the year
316,212
36,297
HANOVER DAIRIES LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 MAY 2024
- 19 -
10
Dividends
2024
2023
£
£
Interim paid
838,850
646,350
11
Intangible fixed assets
Goodwill
£
Cost
At 1 June 2023
2,785,537
Additions
68,250
At 31 May 2024
2,853,787
Amortisation and impairment
At 1 June 2023
2,737,593
Amortisation charged for the year
20,483
At 31 May 2024
2,758,076
Carrying amount
At 31 May 2024
95,711
At 31 May 2023
47,944
12
Tangible fixed assets
Plant and machinery
Motor vehicles
Total
£
£
£
Cost
At 1 June 2023
418,188
3,126,249
3,544,437
Additions
15,689
707,065
722,754
Disposals
(1,985)
(457,177)
(459,162)
At 31 May 2024
431,892
3,376,137
3,808,029
Depreciation and impairment
At 1 June 2023
173,372
1,200,679
1,374,051
Depreciation charged in the year
31,414
428,060
459,474
Eliminated in respect of disposals
(1,692)
(326,505)
(328,197)
At 31 May 2024
203,094
1,302,234
1,505,328
Carrying amount
At 31 May 2024
228,798
2,073,903
2,302,701
At 31 May 2023
244,816
1,925,570
2,170,386
HANOVER DAIRIES LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 MAY 2024
12
Tangible fixed assets
(Continued)
- 20 -
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
£
£
Motor vehicles
1,877,293
1,657,948
13
Stocks
2024
2023
£
£
Raw materials and consumables
27,343
41,143
14
Debtors
2024
2023
Amounts falling due within one year:
£
£
Trade debtors
1,535,124
1,533,403
Corporation tax recoverable
182,015
Other debtors
2,552,211
2,751,213
Prepayments and accrued income
329,066
37,957
4,598,416
4,322,573
15
Creditors: amounts falling due within one year
2024
2023
Notes
£
£
Bank loans and overdrafts
17
450,284
563,386
Obligations under finance leases
18
652,169
574,505
Trade creditors
1,328,234
1,545,690
Corporation tax
288,370
Other taxation and social security
78,357
84,416
Other creditors
49,119
34,299
Accruals and deferred income
332,921
47,393
3,179,454
2,849,689
Obligations under finance leases are secured on the assets to which they relate.
HANOVER DAIRIES LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 MAY 2024
- 21 -
16
Creditors: amounts falling due after more than one year
2024
2023
Notes
£
£
Obligations under finance leases
18
715,403
782,933
Obligations under finance leases are secured on the assets to which they relate.
17
Loans and overdrafts
2024
2023
£
£
Bank loans
36,029
Bank overdrafts
450,284
527,357
450,284
563,386
Payable within one year
450,284
563,386
The bank overdraft facility is secured by a fixed and floating charge over all assets of the company and a guarantee from HD Homes Limited, a company under common control, supported by a debenture over all assets of HD Homes Limited, and first legal charge over HD Homes Limited investment properties.
Bank loans were repaid in full during the year.
18
Finance lease obligations
2024
2023
Future minimum lease payments due under finance leases:
£
£
Within one year
652,169
574,505
In two to five years
715,403
782,933
1,367,572
1,357,438
Finance lease payments represent rentals payable by the company for certain items of motor vehicles. 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 4 years. All leases are on a fixed repayment basis and no arrangements have been entered into for contingent rental payments.
HANOVER DAIRIES LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 MAY 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
506,119
450,168
2024
Movements in the year:
£
Liability at 1 June 2023
450,168
Charge to profit or loss
55,951
Liability at 31 May 2024
506,119
20
Retirement benefit schemes
2024
2023
Defined contribution schemes
£
£
Charge to profit or loss in respect of defined contribution schemes
100,788
80,697
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
1,000
1,000
1,000
1,000
A shares of £1 each
1
1
1
1
B shares of £1 each
1
1
1
1
C shares of £1 each
1
1
1
1
1,003
1,003
1,003
1,003
The company has four classes of shares.
The Ordinary shares hold full voting rights.
The A shares, B shares and C shares hold full voting rights and the right to dividends at the discretion of the directors. The shares are redeemable at nominal value.
HANOVER DAIRIES LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 MAY 2024
- 23 -
22
Financial commitments, guarantees and contingent liabilities
There is a cross-company bank guarantee in place between Hanover Dairies Limited and HD Homes Limited which is supported by a fixed and floating charge over all assets of Hanover Dairies Limited and HD Homes Limited, and first legal charge over HD Homes Limited investment properties.
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
71,554
71,554
Between two and five years
251,906
253,120
In over five years
84,000
146,067
407,460
470,741
24
Related party transactions
Remuneration of key management personnel
The remuneration of key management personnel, who are also directors, is as follows.
2024
2023
£
£
Aggregate compensation
629,089
646,502
Related party transactions
HD Homes Ltd, a company under common control, has provided a guarantee and indemnity for the purpose of providing security on behalf of Hanover Dairies Ltd.
During the year, the company utilised a property owned by a related company under common control. Rents charged in the year were £nil (2023 - £140,000).
At the year end £1,864,245 (2023 - £2,080,779) was due from related companies under common control.
HANOVER DAIRIES LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 MAY 2024
- 24 -
25
Directors' transactions
Dividends totalling £838,850 (2023 - £646,350) were paid in the year in respect of shares held by the company's directors.
Transactions in relation to loans with directors during the year are outlined in the table below:
Description
% Rate
Opening balance
Amounts advanced
Interest charged
Amounts repaid
Closing balance
£
£
£
£
£
Directors' loan accounts
-
554,757
804,922
27,268
(838,850)
548,097
554,757
804,922
27,268
(838,850)
548,097
26
Ultimate controlling party
The company is under the control of Mr T A Hanover and Mrs V Hanover, by virtue off their 99.7% holding of the company's voting share capital.
27
Cash generated from operations
2024
2023
£
£
Profit for the year after tax
918,102
163,513
Adjustments for:
Taxation charged
316,212
36,297
Finance costs
109,480
118,536
Investment income
(27,442)
(14,506)
Gain on disposal of tangible fixed assets
(6,734)
(91,515)
Gain on disposal of intangible assets
-
(23,000)
Amortisation and impairment of intangible assets
20,483
20,863
Depreciation and impairment of tangible fixed assets
459,474
462,158
Movements in working capital:
Decrease/(increase) in stocks
13,800
(15,161)
(Increase)/decrease in debtors
(100,488)
783,192
Increase/(decrease) in creditors
76,833
(4,135)
Cash generated from operations
1,779,720
1,436,242
HANOVER DAIRIES LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 MAY 2024
- 25 -
28
Analysis of changes in net debt
1 June 2023
Cash flows
New finance leases
31 May 2024
£
£
£
£
Cash at bank and in hand
46,943
(44,687)
-
2,256
Bank overdrafts
(527,357)
77,073
-
(450,284)
(480,414)
32,386
-
(448,028)
Borrowings excluding overdrafts
(36,029)
36,029
-
-
Obligations under finance leases
(1,357,438)
605,567
(615,701)
(1,367,572)
(1,873,881)
673,982
(615,701)
(1,815,600)
- 26 -
HANOVER DAIRIES LIMITED
MANAGEMENT INFORMATION
FOR THE YEAR ENDED 31 MAY 2024
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