Company Registration No. SC062328 (Scotland)
THE HARBRO GROUP LTD.
ANNUAL REPORT AND FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2024
THE HARBRO GROUP LTD.
COMPANY INFORMATION
Directors
R Baxter
C J Baxter
S Kenyon
W A Bain
C Peck
Secretary
LC Secretaries Limited
Company number
SC062328
Registered office
Markethill Road
TURRIFF
AB53 4PA
Auditor
Johnston Carmichael LLP
Strathlossie House
Elgin Business Park
1 Kirkhill Avenue
Elgin
IV30 8DE
Business address
Markethill Road
TURRIFF
AB53 4PA
THE HARBRO GROUP LTD.
CONTENTS
Page
Strategic report
1 - 6
Directors' report
7 - 8
Directors' responsibilities statement
9
Independent auditor's report
10 - 13
Group profit and loss account
14
Group balance sheet
15
Company balance sheet
16
Group statement of changes in equity
17
Company statement of changes in equity
18
Group statement of cash flows
19
Notes to the financial statements
20 - 42
THE HARBRO GROUP LTD.
STRATEGIC REPORT
FOR THE YEAR ENDED 30 JUNE 2024
- 1 -
The directors present the strategic report for the year ended 30 June 2024.
Business Review
The principal activity of the company and that of its subsidiaries is the manufacture and supply of animal feedstuff and associated agricultural products and services. There has been no significant change in the principal activities during the year under review nor do the directors expect there to be in the next year.
The Group continues to seek innovative new products sourced both internally and externally and supporting this there is a continuing commitment to providing the best quality products and advice available. The diverse but focused nature of the companies comprising The Harbro Group Ltd ensures that the farming community has access to whatever feedstuff, related agricultural product or service is required.
The year to 30th June 2024 started out with UK inflation running at a high level, however, the CPI rate dropped progressively to a level of 2.0% by the end of the financial year. Raw material costs softened in line with this through the year but overhead and payroll costs increased significantly year on year.
As a result of falling inflation and reduced raw material prices, turnover was slightly behind previous years – this was price related. Volumes have grown across the business and, with a rising overhead cost base, it was important that the business maintained and grew gross profit at an appropriate level. The Harbro Group remain very agile and react quickly to the high inflation environment.
In keeping with recent years, maintaining a strong Balance Sheet with steady cash flows was the main focus with good processes and controls in place to manage supply and costs of raw materials as well as robust cost control across all overheads. Capital investment decisions follow tight return on investment protocols to further ensure that focus on cash flow. The business had significant cash generation in the financial year and that has continued into the year to June 2025.
The business witnessed good growth in volumes across our key categories across all Revenue Streams. The Board have some focused strategic growth initiatives within these Revenue Streams which will result in further EBIT growth going forward.
Wage cost inflation continued at high levels with the National Minimum Wage increases having a greater impact across the Harbro workforce than in previous years. Headcount increased from 448 to 449 in the year and there was an increase in payroll costs. The post COVID world has seen a churn of people across many businesses and the Harbro Group has not been immune to this with attrition rising moderately year on year.
In late June 2024, The Harbro Group completed the acquisition of Murray Farmcare Limited, based in Dumfries, Scotland. This acquisition allows the business to expand both its retail offering and direct to farm offering further in the South of Scotland and the North of England.
We continued to invest in development and training for employees. The health and wellbeing of our employees is important and a more strategic health & safety approach has been taken to ensure they have a safe working environment now and in the future.
The Group continue to invest in improving processes in an effort to allow the business to become leaner, more efficient and allow better control of overhead costs.
Securing raw materials at the right price for our production facilities is important and is requiring significant focus in a volatile and high inflation environment; this is managed by the forward buying of cereals and proteins direct from customers and the trade where appropriate.
As in previous years, the Board remains focused on the repayment of structured debt. During the year to June 2024, the company paid down a significant amount of both term debt and working capital facilities; and bank covenants remain at very healthy levels. Cash flow management can be difficult in our industry, and a proactive and structured approach to our credit control ensures that debtor days are closely monitored and kept at an acceptable level.
The Group debt is shown on page 36 of the financial statements at varying amounts over base rate or SONIA.
Our production facilities continue to perform well with a variety of maintenance capital expenditure work being undertaken across all sites as well as the installation of further automation in our Birkhill Mill. We continue to explore further automation options for all of our sites.
THE HARBRO GROUP LTD.
STRATEGIC REPORT (CONTINUED)
FOR THE YEAR ENDED 30 JUNE 2024
- 2 -
As shown in the group profit and loss account on page 14, sales have decreased by £3 million over the previous year to £145 million. Our sales internationally have increased to £1.7million in the year. Profits before tax have increased by £1.2million to £5.2 million.
Our Technical function continues to be innovative and we have seen further positive trial results and we continue with a focused approach to R&D. The Harbro Group is a progressive and innovative business and we actively have encouraged our customers to take that same approach.
Our employees are central to the success of the Group. The company continues to invest in training and support to all employees to ensure they have the skills required to perform their duties and to provide an excellent service to our customers.
The Directors are encouraged by their customers continuing innovation across the livestock sector. As the leading animal nutrition company in Scotland, we concentrate on high quality feed and livestock products backed up with excellent technical support. Our focus on improving animal performance and customer profitability is paramount and it is clear that our advice and products are helping farmers move forward with their own diversified business plans.
Principal risks and mitigation
Our business is subject to a variety of risks and uncertainties. The following risks are regarded as the most significant to The Harbro Group at this time:
i) Supply Chain
The Group operates in an industry where there can be a high degree of volatility in commodity and raw material prices.
The Group maintains strong partnerships with key suppliers and enter into forward contracts to mitigate this risk.
iii) Inflation & Interest Rates – rising costs
The UK is coming out of a period of high inflation and higher Bank of England base rates.
Given our debt is at historically low levels, the Group do little in the way of interest rate hedging given the impact of rising interest rates is clearly understood and adequately budgeted for.
There is close monitoring of costs across raw materials, overheads and people. This is mitigated against by a close focus on efficiencies, work scheduling and investment in technologies and energy efficient plant and machinery.
iii) IT and cyber security
The Group relies on the IT infrastructure it has in place to support the business. Any failure or cyber-attack on this infrastructure could impact the effective operation of the business.
The Group has a strong IT support team and work very closely with all software suppliers and consultants to ensure appropriate security levels are in place. There is an investment programme in place ensuring the business is following best security practices including awareness training for employees.
iv) People
Recruitment, development and retention of key people is crucial to the success of The Harbro Group.
The board work closely with senior management and HR to ensure the development of our people is at the forefront of our strategic discussions. The Harbro Group have a people strategy that is worked in conjunction with our business strategies.
THE HARBRO GROUP LTD.
STRATEGIC REPORT (CONTINUED)
FOR THE YEAR ENDED 30 JUNE 2024
- 3 -
Future Developments
The Harbro Group has no acquisitions on the horizon, the Board recognise that in order to facilitate the strategic growth ambitions of the business it may be that acquisition opportunities will present themselves. The ability for the business to react quickly to these opportunities is important and our strategic partners are fully supportive of this.
Strategic Planning has always been seen as crucial within the Harbro Group. As the business continues to grow, the strategy direction of the Group and its various business streams becomes even more important. The Board recognise the importance of ensuring our people understand and support the strategy; and all revenue stream strategies have been cascaded through the business.
Key Performance Indicators
The Group monitors business performance by means of a variety of key performance indicators at a company and divisional level. These KPI’s are reported monthly at board and operational meetings.
Profitability is measured by looking at a number of measures versus business plan e.g. EBITDA, gross margin and pre-tax profits. The balance sheet is measured by looking at a variety of KPI’s including Debtor Days, Creditor Days, Stock Turnover and Bank covenants.
2024
2023
Change
Profitability KPI's
EBITDA (£'000)
8,810
7,706
14%
Gross Margin
18%
16%
2%
Pre-tax profit (£'000)
5,216
4,009
30%
Balance sheet KPI's
Debtor days
48
45
6%
Creditor days
45
50
(10)%
Stock turnover
7.88
8.39
(6)%
S172 (1) Statement
In 2018 the Companies (Miscellaneous Reporting) Regulations introduced a requirement for large companies to publish a statement describing how the directors have had regard to the matters set out in section 172 (1) (a) to (f) of the Companies Act 2006.
Section 172 (1) (a) to (f) requires each director to act in the way he or she considers would be most likely to promote the success of the company for the benefit of its members as a whole, with regard to the following matters:
(a) The likely consequences of any decision on the long-term
Medium to longer term strategic planning is a key element of the Harbro Group’s board of directors’ responsibilities. This is underpinned by clear vision, values and strategic objectives that have been cascaded through the business and to our stakeholders.
All decisions taken within the business are made with reference to our strategic objectives which focus on the following areas:
Sustainable profitable growth
Innovation & continuous improvement to increase efficiency and profitability
People strategy focused on developing the abilities and potential of our people
Customer focused
THE HARBRO GROUP LTD.
STRATEGIC REPORT (CONTINUED)
FOR THE YEAR ENDED 30 JUNE 2024
- 4 -
(b) The interests of the company’s employees
The board considers our people to be our greatest asset and the interests of our employees are always taken into consideration in the decisions that are made.
One of the businesses strategic objectives is that “we will deliver a robust people strategy focused on developing the abilities and potential of our people in a safe working environment”.
The company issues a quarterly communication update, copies of which are made available to all employees.
As part of our COVID-19 response we have recently established a Health & Wellbeing committee to ensure we are providing employees with as much support as required. This committee has continued post pandemic. Through this committee, we have undertaken employee surveys to obtain the views of our employees.
We make available a confidential service called an Employee Assistance Programme
(c) The need to foster the company’s business relationships with suppliers, customers and others.
We have a Commercial and Purchasing team who work closely with our suppliers across the business. A number of our key suppliers have worked with the business for almost 40 years; this has ensured that the Group have strong strategic partnerships with these suppliers.
Customer focus is one of our core values and translates into our strategic objective – “We will have a strong customer focus throughout the business ensuring the quality of our service, products and advice is outstanding.” Our species based sales specialists are knowledgeable and well trained in their species ensuring we can provide this “outstanding” support.
As well as customers and suppliers, we seek to build strong relationships with other key stakeholders, including industry/trade bodies and societies. Our directors take an active interest in these connections and in some cases have board involvement so as to build and maintain such relationships, and ensure that the board are at the fore front of industry discussions
(d) The impact of the company’s operations on the community and environment
Our environmental strategy is split into 3 main pillars. The first is the environmental efficiency of our customers and our nutritional offerings. We have an R&D team that works closely with customers, our sales specialists and other interested parties on this. The second pillar is sustainability, in 2019/20 we took the decision to actively remove soya from a range of products and to only buy responsibly sourced palm oil products (RSPO). Where we do use soya we encourage customers to engage in the various sustainable schemes. The third pillar is our internal practices through our environmental strategy group. Current projects include improved transport efficiencies, reduced energy consumption at our production sites, paper and packaging reduction.
We understand our importance as a key employer in our main locations across the country.
(e) The desirability of the company maintaining a reputation for high standards of business conduct.
We believe it is vital that we are trusted by our stakeholders and therefore we seek to maintain high standards in all that we do as a business.
Our Employee Handbook, and other relevant policies apply across the business are reviewed regularly. Amongst other things, they cover conflicts of interest, our anti-bribery policy, whistleblowing, our expectations of conduct in the workplace and matters in relation to confidentiality, along with our policies aimed and preventing the use of modern slavery, people trafficking and child labour in any aspect of our business.
THE HARBRO GROUP LTD.
STRATEGIC REPORT (CONTINUED)
FOR THE YEAR ENDED 30 JUNE 2024
- 5 -
(f) The need to act fairly as between members of the company
We have ten shareholders and their interests are represented on the board. The board of directors is comprised of six executive directors and one non-executive director, with one of the executive directors also undertaking the role of chairman. We believe this ensures all shareholders are treated fairly and that their views are fully represented when making key decisions.
Furthermore, as well as the Articles of Association, we have a Shareholders Agreement in place which clearly set out shareholders rights and any decisions that require shareholder consent.
Streamlined Energy and Carbon Reporting
In line with the Companies (Directors' Report) and Limited Liability Partnerships (Energy and Carbon Report) Regulations 2018 our energy use and greenhouse gas (GHG) emissions are set out below.
The data relates to UK emissions for the 12-month period from 1 July 2023 to 30 June 2024.
The Harbro Group Ltd Energy Use and Associated Greenhouse Gas Emissions
2024
2023
Total energy consumption
42,488,305 kWh
49,477,903 kWh
Emissions from combustion of gas (Scope 1)
120 tCO2e
218 tCO2e
Emissions from combustion of fuel for the purpose
5,384 tCO2e
9,635 tCO2e
of transport (Scope 1)
Emissions from purchased electricity (Scope 2)
1,218 tCO2e
1,033 tCO2e
Emissions from business travel in rental cars or employee-owned vehicles where company is responsible for purchasing the fuel (Scope 3)
23 tCO2e
79 tCO2e
Total gross emissions
9,929 tCO2e
11,471 tCO2e
Emissions per sales quantity (per tonne)
0.06 tCO2e per sales quantity
0.09 tCO2e per sales quantity
Quantification and Reporting Methodology:
We report our emissions with reference to the latest Greenhouse Gas Protocol Corporate Accounting and Reporting Standard (GHG Protocol). In accordance with the 2018 Regulations, the energy use and associated greenhouse gas emissions are for those within the UK only that come under the operational control boundary. Therefore, energy use and emissions are aligned with financial reporting for the UK subsidiaries and exclude the non-UK based subsidiaries that would not qualify under the 2018 Regulations in their own right. The 2024 UK Government GHG Conversion Factors for Company Reporting published by the UK Department for Environment Food & Rural Affairs (DEFRA) are used to convert energy use in our operations to emissions of CO2e. Carbon emission factors for purchased electricity calculated according to the ‘location-based grid average' method. This reflects the average emission of the grid where the energy consumption occurs. Data sources include billing, invoices and the Group's internal systems. We purchase 100% renewable electricity for our Toremill, Birkhill, Smiddyseat, Mintlaw Blends and Duns Retail sites and have included an additional net emissions figure calculated using market-based factors to account for this in our report. For transport data where actual usage data (e.g. litres) was unavailable conversions were made using average fuel consumption factors to estimate the usage.
Intensity Ratio
We have chosen to report our gross emissions against total sales quantity.
THE HARBRO GROUP LTD.
STRATEGIC REPORT (CONTINUED)
FOR THE YEAR ENDED 30 JUNE 2024
- 6 -
Energy Efficiency Action:
The Harbro Group Ltd are committed to reducing the Environmental impact of our operations. In the period covered by the report, the company has renewed forklift contracts to electric forklifts, continued to offer electric vehicles for sales teams whilst committing to and reducing their mileage using technology to conduct meetings and added an environmental section at the conference to confirm intentions. The Harbro Group Ltd have also reduced printing and associated postage by offering customers digital invoicing and receiving digital invoices from suppliers and increased their pallet size to 1.225 T (from 1 T) to improve efficiencies on site and at delivery.
C J Baxter
Director
27 March 2025
THE HARBRO GROUP LTD.
DIRECTORS' REPORT
FOR THE YEAR ENDED 30 JUNE 2024
- 7 -
The directors present their annual report and financial statements for the year ended 30 June 2024.
Principal activities
The principal activity of the Group and that of its subsidiaries is the manufacture and supply of animal feedstuff and associated agricultural products and services. There has been no significant change in the principal activities during the year under review nor do the directors expect there to be in the next year.
Results and dividends
The results for the year are set out on page 14.
Ordinary dividends were paid amounting to £450,000. The directors do not recommend payment of a further dividend.
Preference dividends were paid amounting to £180,894.
Directors
The directors who held office during the year and up to the date of signature of the financial statements were as follows:
R Baxter
C J Baxter
S Kenyon
W A Bain
C Peck
Financial risk management
The Group's reported profit and net assets are affected by fluctuations in foreign exchange rates. We manage, as deemed appropriate, the risks associated with these movements by taking forward positions across a range of foreign currencies, but do not use derivative financial instruments for speculative purposes.
Disabled persons
Applications for employment by disabled persons are always fully considered, bearing in mind the aptitudes of the applicant concerned. In the event of members of staff becoming disabled, every effort is made to ensure that their employment within the Group continues and that the appropriate training is arranged. It is the policy of the group that the training, career development and promotion of disabled persons should, as far as possible, be identical to that of other employees.
Employee involvement
The Group's policy is to consult and discuss with employees, through unions, staff councils and at meetings, matters likely to affect employees' interests.
Information on matters of concern to employees is given through information bulletins and reports which seek to achieve a common awareness on the part of all employees of the financial and economic factors affecting the group's performance.
Auditor
In accordance with the company's articles, a resolution proposing that Johnston Carmichael LLP be reappointed as auditor of the group will be put at a General Meeting.
THE HARBRO GROUP LTD.
DIRECTORS' REPORT (CONTINUED)
FOR THE YEAR ENDED 30 JUNE 2024
- 8 -
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 auditor of the company and group 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 auditor of the company and group is aware of that information.
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. It has done so in respect of future developments and streamlined energy and carbon reporting.
On behalf of the board
C J Baxter
Director
27 March 2025
THE HARBRO GROUP LTD.
DIRECTORS' RESPONSIBILITIES STATEMENT
FOR THE YEAR ENDED 30 JUNE 2024
- 9 -
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 group and company, and of the profit or loss of the group 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;
state whether applicable UK Accounting Standards have been followed, subject to any material departures disclosed and explained in the ;
prepare the on the going concern basis unless it is inappropriate to presume that the group and company will continue in business.
The directors are responsible for keeping adequate accounting records that are sufficient to show and explain the group’s and company’s transactions and disclose with reasonable accuracy at any time the financial position of the group and 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 group and company and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.
THE HARBRO GROUP LTD.
INDEPENDENT AUDITOR'S REPORT
TO THE MEMBERS OF THE HARBRO GROUP LTD.
- 10 -
Opinion
We have audited the financial statements of The Harbro Group Ltd. (the 'parent company') and its subsidiaries (the 'group') for the year ended 30 June 2024 which comprise the Group Profit and Loss account, the Group Balance Sheet, the Company Balance Sheet, the Group Statement of Changes in Equity, the Company Statement of Changes in Equity, the Group Statement of Cash Flows and notes to the financial statements, including significant accounting policies. The financial reporting framework that has been applied in their preparation is applicable law and United Kingdom Accounting Standards, including Financial Reporting Standard 102 The Financial Reporting Standard applicable in the UK and Republic of Ireland (United Kingdom Generally Accepted Accounting Practice).
In our opinion the financial statements:
give a true and fair view of the state of the group's and the parent company's affairs as at 30 June 2024 and of the group's 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 responsibilities for the audit of the financial statements section of our report. We are independent of the group in accordance with the ethical requirements that are relevant to our audit of the financial statements in the UK, including the FRC’s Ethical Standard, and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
Conclusions relating to going concern
In auditing the financial statements, we have concluded that the directors' use of the going concern basis of accounting in the preparation of the financial statements is appropriate.
Based on the work we have performed, we have not identified any material uncertainties relating to events or conditions that, individually or collectively, may cast significant doubt on the group's and parent company’s ability to continue as a going concern for a period of at least twelve months from when the financial statements are authorised for issue.
Our responsibilities and the responsibilities of the directors with respect to going concern are described in the relevant sections of this report.
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.
THE HARBRO GROUP LTD.
INDEPENDENT AUDITOR'S REPORT (CONTINUED)
TO THE MEMBERS OF THE HARBRO GROUP LTD.
- 11 -
Matters on which we are required to report by exception
In the light of the knowledge and understanding of the group and the parent company and their environment obtained in the course of the audit, we have not identified material misstatements in the strategic report and the directors' report.
We have nothing to report in respect of the following matters in relation to which the Companies Act 2006 requires us to report to you if, in our opinion:
adequate accounting records have not been kept by the parent company, or returns adequate for our audit have not been received from branches not visited by us; or
the parent company financial statements are not in agreement with the accounting records and returns; or
certain disclosures of directors' remuneration specified by law are not made; or
we have not received all the information and explanations we require for our audit.
Responsibilities of directors
As explained more fully in the directors' responsibilities statement set out on page 9, 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 group's and the parent company’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the directors either intend to liquidate the group or the parent company or to cease operations, or have no realistic alternative but to do so.
Auditor 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.
A further description of our responsibilities for the audit of the financial statements is located on the Financial Reporting Council’s website at: http://www.frc.org.uk/auditorsresponsibilities. This description forms part of our auditor’s report.
Extent to which the audit was considered capable of detecting irregularities, including fraud
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.
We assessed whether the engagement team collectively had the appropriate competence and capabilities to identify or recognise non-compliance with laws and regulations by considering their experience, past performance and support available.
All engagement team members were briefed on relevant identified laws and regulations and potential fraud risks at the planning stage of the audit. Engagement team members were reminded to remain alert to any indications of fraud or non-compliance with laws and regulations throughout the audit.
THE HARBRO GROUP LTD.
INDEPENDENT AUDITOR'S REPORT (CONTINUED)
TO THE MEMBERS OF THE HARBRO GROUP LTD.
- 12 -
We obtained an understanding of the legal and regulatory frameworks that are applicable to the group and parent company and the sector in which they operate, focusing on those provisions that had a direct effect on the determination of material amounts and disclosures in the financial statements. The most relevant frameworks we identified include:
UK GAAP
Companies Act 2006
Corporation Tax legislation
VAT legislation
Health & Safety at Work Act 1974; and
General Data Protection Regulation.
We gained an understanding of how the group and the parent company are complying with these laws and regulations by making enquiries of management and those charged with governance. We corroborated these enquiries through our review of submitted returns, external inspections, relevant correspondence with regulatory bodies and board meeting minutes.
We assessed the susceptibility of the group’s and parent company’s financial statements to material misstatement, including how fraud might occur, by meeting with management and those charged with governance to understand where it was considered there was susceptibility to fraud. This evaluation also considered how management and those charged with governance were remunerated and whether this provided an incentive for fraudulent activity. We considered the overall control environment and how management and those charged with governance oversee the implementation and operation of controls. In areas of the financial statements where the risks were considered to be higher, we performed procedures to address each identified risk. We identified a heightened fraud risk in relation to:
The following procedures were performed to provide reasonable assurance that the financial statements were free of material fraud or error:
Reviewing minutes of meetings of those charged with governance for reference to: breaches of laws and regulation or for any indication of any potential litigation and claims; and events or conditions that could indicate an incentive or pressure to commit fraud or provide an opportunity to commit fraud;
Reviewing the level of and reasoning behind the group’s and parent company’s procurement of legal and professional services
Performing audit procedures over the risk of management override of controls, including testing of journal entries and other adjustments for appropriateness, evaluating the business rationale of significant transactions outside the normal course of business and assessing judgements made by management in their calculation of accounting estimates for potential management bias;
Procedures to confirm the completeness of revenue, ensuring recognised in line with the group's and parent company's accounting policies;
Completion of appropriate checklists and use of our experience to assess the group’s and parent company’s compliance with the Companies Act 2006; and
Agreement of the financial statement disclosures to supporting documentation.
Our audit procedures were designed to respond to the risk of material misstatements in the financial statements, recognising that the risk of not detecting a material misstatement due to fraud is higher than the risk of not detecting one resulting from error, as fraud may involve intentional concealment, forgery, collusion, omission or misrepresentation. There are inherent limitations in the audit procedures performed and the further removed non-compliance with laws and regulations is from the events and transactions reflected in the financial statements, the less likely we are to become aware of it.
THE HARBRO GROUP LTD.
INDEPENDENT AUDITOR'S REPORT (CONTINUED)
TO THE MEMBERS OF THE HARBRO GROUP LTD.
- 13 -
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.
Fiona Munro (Senior Statutory Auditor)
For and on behalf of Johnston Carmichael LLP
27 March 2025
Statutory Auditor
Strathlossie House
Elgin Business Park
1 Kirkhill Avenue
Elgin
IV30 8DE
THE HARBRO GROUP LTD.
GROUP PROFIT AND LOSS ACCOUNT
FOR THE YEAR ENDED 30 JUNE 2024
- 14 -
2024
2023
Notes
£000
£000
Turnover
3
144,990
147,976
Cost of sales
(119,530)
(124,180)
Gross profit
25,460
23,796
Administrative expenses
(20,927)
(19,849)
Other operating income
1,086
464
Operating profit
4
5,619
4,411
Interest receivable and similar income
8
105
71
Interest payable and similar expenses
9
(508)
(473)
Profit before taxation
5,216
4,009
Tax on profit
10
(1,005)
(354)
Profit for the financial year
29
4,211
3,655
Total comprehensive income for the year
4,211
3,655
The profit and loss account has been prepared on the basis that all operations are continuing operations.
THE HARBRO GROUP LTD.
GROUP BALANCE SHEET
AS AT 30 JUNE 2024
30 June 2024
- 15 -
2024
2023
Notes
£000
£000
£000
£000
Fixed assets
Goodwill
12
1,373
884
Tangible assets
13
13,427
13,171
Investments
14
10
3
14,810
14,058
Current assets
Stocks
16
15,164
14,408
Debtors
17
25,765
26,521
Cash at bank and in hand
2,869
1,745
43,798
42,674
Creditors: amounts falling due within one year
19
(20,115)
(21,878)
Net current assets
23,683
20,796
Total assets less current liabilities
38,493
34,854
Creditors: amounts falling due after more than one year
20
(6,090)
(6,200)
Provisions for liabilities
Provisions
23
863
863
Deferred tax liability
24
868
666
(1,731)
(1,529)
Net assets
30,672
27,125
Capital and reserves
Called up share capital
26
314
316
Share premium account
27
173
173
Capital redemption reserve
28
717
715
Profit and loss reserves
29
29,468
25,921
Total equity
30,672
27,125
The financial statements were approved by the board of directors and authorised for issue on 27 March 2025 and are signed on its behalf by:
27 March 2025
R Baxter
C J Baxter
Director
Director
THE HARBRO GROUP LTD.
COMPANY BALANCE SHEET
AS AT 30 JUNE 2024
30 June 2024
- 16 -
2024
2023
Notes
£000
£000
£000
£000
Fixed assets
Tangible assets
13
3,855
4,316
Investments
14
9,425
9,425
13,280
13,741
Current assets
Debtors
17
2,080
2,464
Cash at bank and in hand
1
2,081
2,464
Creditors: amounts falling due within one year
19
(10,684)
(10,172)
Net current liabilities
(8,603)
(7,708)
Total assets less current liabilities
4,677
6,033
Creditors: amounts falling due after more than one year
20
(4,850)
(5,450)
Provisions for liabilities
Deferred tax liability
24
289
340
(289)
(340)
Net (liabilities)/assets
(462)
243
Capital and reserves
Called up share capital
26
314
316
Share premium account
27
173
173
Capital redemption reserve
28
717
715
Profit and loss reserves
29
(1,666)
(961)
Total equity
(462)
243
As permitted by s408 Companies Act 2006, the company has not presented its own profit and loss account and related notes. The company’s loss for the year was £41k (2023 - £191k profit).
The financial statements were approved by the board of directors and authorised for issue on 27 March 2025 and are signed on its behalf by:
27 March 2025
R Baxter
C J Baxter
Director
Director
Company Registration No. SC062328
THE HARBRO GROUP LTD.
GROUP STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 30 JUNE 2024
- 17 -
Share capital
Share premium account
Capital redemption reserve
Profit and loss reserves
Total
Notes
£000
£000
£000
£000
£000
Balance at 1 July 2022
319
173
713
23,080
24,285
Year ended 30 June 2023:
Profit and total comprehensive income for the year
-
-
-
3,655
3,655
Dividends
11
-
-
-
(600)
(600)
Redemption of shares
26
(3)
-
2
(214)
(215)
Balance at 30 June 2023
316
173
715
25,921
27,125
Year ended 30 June 2024:
Profit and total comprehensive income for the year
-
-
-
4,211
4,211
Dividends
11
-
-
-
(450)
(450)
Redemption of shares
26
(2)
-
2
(214)
(214)
Balance at 30 June 2024
314
173
717
29,468
30,672
THE HARBRO GROUP LTD.
COMPANY STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 30 JUNE 2024
- 18 -
Share capital
Share premium account
Capital redemption reserve
Profit and loss reserves
Total
Notes
£000
£000
£000
£000
£000
Balance at 1 July 2022
319
173
713
(338)
867
Year ended 30 June 2023:
Profit and total comprehensive income for the year
-
-
-
191
191
Dividends
11
-
-
-
(600)
(600)
Redemption of shares
26
(3)
-
2
(214)
(215)
Balance at 30 June 2023
316
173
715
(961)
243
Year ended 30 June 2024:
Loss and total comprehensive income for the year
-
-
-
(41)
(41)
Dividends
11
-
-
-
(450)
(450)
Redemption of shares
26
(2)
-
2
(214)
(214)
Balance at 30 June 2024
314
173
717
(1,666)
(462)
THE HARBRO GROUP LTD.
GROUP STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED 30 JUNE 2024
- 19 -
2024
2023
Notes
£000
£000
£000
£000
Cash flows from operating activities
Cash generated from operations
37
5,475
5,642
Interest paid
(508)
(488)
Income taxes paid
(69)
(549)
Net cash inflow from operating activities
4,898
4,605
Investing activities
Purchase of business
(622)
-
Purchase of tangible fixed assets
(1,223)
(1,809)
Proceeds on disposal of tangible fixed assets
378
134
Interest received
105
71
Net cash used in investing activities
(1,362)
(1,604)
Financing activities
Redemption of ordinary shares
(214)
(215)
Redemption of preference shares
(200)
-
Repayment of borrowings
(598)
(747)
Payment of finance leases obligations
(950)
(63)
Dividends paid to equity shareholders
(450)
(600)
Net cash used in financing activities
(2,412)
(1,625)
Net increase in cash and cash equivalents
1,124
1,376
Cash and cash equivalents at beginning of year
1,745
369
Cash and cash equivalents at end of year
2,869
1,745
Relating to:
Cash at bank and in hand
2,869
1,745
THE HARBRO GROUP LTD.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2024
- 20 -
1
Accounting policies
Company information
The Harbro Group Ltd. (“the company”) is a limited company domiciled and incorporated in Scotland. The registered office is Markethill, TURRIFF, AB53 4PA.
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 group and company. Monetary amounts in these financial statements are rounded to the nearest £000.
The financial statements have been prepared under the historical cost convention modified to include certain financial instruments at fair value. The principal accounting policies adopted are set out below.
The 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 for parent company information presented within the consolidated financial statements:
1.2
Basis of consolidation
The consolidated financial statements incorporate those of The Harbro Group Ltd. and all of its subsidiaries (ie entities that the group controls through its power to govern the financial and operating policies so as to obtain economic benefits).
All financial statements are made up to 30 June 2024.
All intra-group transactions, balances and unrealised gains on transactions between group companies are eliminated on consolidation. Unrealised losses are also eliminated unless the transaction provides evidence of an impairment of the asset transferred.
1.3
Going concern
The group has prepared cash flow projections for a period of 12 months from date of approval of these financial statements. Based on these and available sources of funding at the time of approving the financial statements, the directors have a reasonable expectation that the group and company have 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.
1.4
Turnover
Turnover represents amounts receivable for the manufacture and supply of animal feedstuff and associated agricultural products and the provision of farming and haulage services. Turnover is shown net of VAT and trade discounts.
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.
Revenue from the provision of agricultural services is recognised as the services are provided.
THE HARBRO GROUP LTD.
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 30 JUNE 2024
1
Accounting policies
(Continued)
- 21 -
1.5
Intangible fixed assets - goodwill
Acquired goodwill is written off in equal instalments over its estimated useful economic life of 2-20 years.
1.6
Tangible fixed assets
Tangible fixed assets (excluding investment properties) are initially measured at cost and subsequently measured at cost, net of depreciation and any impairment losses. Investment properties are treated as property, plant and equipment in line with section 16 of FRS 102 (Revised March 2018).
Depreciation is recognised so as to write off the cost of assets less their residual values over their useful lives on the following bases:
Freehold land and buildings
- Land - not depreciated. Buildings - over 10 to 50 years.
Leasehold land and buildings
- over shorter of remaining lease terms and 10 to 50 years
Plant and machinery
- over 5 to 20 years
Fixtures, fittings & equipment
- over 2 to 10 years
Motor vehicles
- 15% to 25% 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 recognised in the profit and loss account.
1.7
Fixed asset investments
In the parent company financial statements, investments in subsidiaries are initially measured at cost and subsequently measured at cost less any accumulated impairment losses. The investments are assessed for impairment at each reporting date and any impairment losses or reversals of impairment are recognised immediately in profit and loss.
A subsidiary is an entity controlled by the group. Control is the power to govern the financial and operating policies of the entity so as to obtain benefits from its activities.
1.8
Impairment of fixed assets
At each reporting period end date, the group reviews the carrying amounts of its tangible and intangible assets to determine whether there is any indication that those assets have suffered an impairment loss. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment loss (if any).
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.
1.9
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.
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 the profit and loss account.
THE HARBRO GROUP LTD.
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 30 JUNE 2024
1
Accounting policies
(Continued)
- 22 -
1.10
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.
1.11
Financial instruments
The group has elected to apply the provisions of Section 11 ‘Basic Financial Instruments’ and Section 12 ‘Other Financial Instruments Issues’ of FRS 102 to all of its financial instruments.
Financial instruments are recognised in the group's balance sheet when the group becomes party to the contractual provisions of the instrument.
Financial assets and liabilities are offset and the net amounts presented in the financial statements when there is a legally enforceable right to set off the recognised amounts and there is an intention to settle on a net basis or to realise the asset and settle the liability simultaneously.
Basic financial assets
Basic financial assets, which include debtors and cash and bank balances, are initially measured at transaction price including transaction costs and are subsequently carried at amortised cost using the effective interest method unless the arrangement constitutes a financing transaction, where the transaction is measured at the present value of the future receipts discounted at a market rate of interest. Financial assets classified as receivable within one year are not amortised.
Other financial assets
Other financial assets, including investments in equity instruments which are not subsidiaries, are initially measured at fair value, which is normally the transaction price. Such assets are subsequently carried at fair value and the changes in fair value are recognised in profit or loss, except that investments in equity instruments that are not publically traded and whose fair values cannot be measured reliably are measured at cost less impairment.
Impairment of financial assets
Financial assets 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.
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 group transfers the financial asset and substantially all the risks and rewards of ownership to another entity, or if some significant risks and rewards of ownership are retained but control of the asset has transferred to another party that is able to sell the asset in its entirety to an unrelated third party.
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 group after deducting all of its liabilities.
THE HARBRO GROUP LTD.
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 30 JUNE 2024
1
Accounting policies
(Continued)
- 23 -
Basic financial liabilities
Basic financial liabilities, including creditors, bank loans, loans from fellow group companies and preference shares that are classified as debt, are initially recognised at transaction price unless the arrangement constitutes a financing transaction, where the debt instrument is measured at the present value of the future payments discounted at a market rate of interest. Financial liabilities classified as payable within one year are not amortised.
Debt instruments are subsequently carried at amortised cost, using the effective interest rate method.
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.
Other financial liabilities
Derivatives, including forward foreign exchange contracts, are not basic financial instruments. Derivatives are initially recognised at fair value on the date a derivative contract is entered into and are subsequently re-measured at their fair value. Changes in the fair value of derivatives are recognised in profit or loss in finance costs or finance income as appropriate, unless hedge accounting is applied and the hedge is a cash flow hedge.
Derecognition of financial liabilities
Financial liabilities are derecognised when the group's contractual obligations expire or are discharged or cancelled.
1.12
Equity instruments
Equity instruments issued by the group are recorded at the proceeds received, net of transaction costs. Dividends payable on equity instruments are recognised as liabilities once they are no longer at the discretion of the group.
1.13
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 group’s liability for current tax is calculated using tax rates that have been enacted or substantively enacted by the reporting end date.
THE HARBRO GROUP LTD.
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 30 JUNE 2024
1
Accounting policies
(Continued)
- 24 -
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 if, and only if, there is a legally enforceable right to offset current tax assets and liabilities and the deferred tax assets and liabilities relate to taxes levied by the same tax authority.
1.14
Provisions
Provisions are recognised when the group has a legal or constructive present obligation as a result of a past event, it is probable that the group will be required to settle that obligation and a reliable estimate can be made of the amount of the obligation.
The amount recognised as a provision is the best estimate of the consideration required to settle the present obligation at the reporting end date, taking into account the risks and uncertainties surrounding the obligation. Where the effect of the time value of money is material, the amount expected to be required to settle the obligation is recognised at present value. When a provision is measured at present value, the unwinding of the discount is recognised as a finance cost in profit or loss in the period in which it arises.
1.15
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.
1.16
Retirement benefits
The group operates several defined contribution pension schemes. Contributions are charged to the profit and loss account as they become payable in accordance with the rules of the schemes.
1.17
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 the profit and loss account 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 income 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 lease asset are consumed.
THE HARBRO GROUP LTD.
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 30 JUNE 2024
1
Accounting policies
(Continued)
- 25 -
1.18
Foreign exchange
Transactions and balances
Transactions in currencies other than pounds sterling are recorded at the rates of exchange prevailing at the dates of the transactions. At each reporting end date, monetary assets and liabilities that are denominated in foreign currencies are retranslated at the rates prevailing on the reporting end date. Gains and losses arising on translation are included in the profit and loss account for the period.
Translation of overseas subsidiaries
Assets and liabilities of overseas subsidiaries are retranslated at the rate of exchange ruling at the balance sheet date. Income and expenses have been translated at the average rate of exchange as an approximation of the rate of exchange at the date of each transaction. All resulting exchange differences are recognised in other comprehensive income.
2
Judgements and key sources of estimation uncertainty
In the application of the group’s accounting policies, the directors are required to make judgements, estimates and assumptions about the carrying amount of assets and liabilities that are not readily apparent from other sources. The estimates and associated assumptions are based on historical experience and other factors that are considered to be relevant. Actual results may differ from these estimates.
The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised where the revision affects only that period, or in the period of the revision and future periods where the revision affects both current and future periods.
Useful life of Goodwill
Determining the useful life of goodwill (group net book value - £1,373k, company - £nil) requires an estimation of the expected period in which economic benefits are expected to flow to the entity. This requires the entity to estimate the future cash flows expected to arise from each of the cash generating units and the period in which they will arise and continue for in the foreseeable to determine the appropriate period for goodwill to be amortised over.
Stock provision - £670k (2023 - £659k)
Determining the carrying value of stock requires the group to consider if there are any amounts included within their year-end stock which they may not have the ability to sell of may be required to sell at less than cost. If there are any items identified as having an estimated net realisable value that is less than cost, the group will have to determine an amount to be recognised as an impairment against their stock balance at the year end. In arriving at this provision the group has regard to the ageing of stock and items that are either static or slow-moving or where there are excess quantities beyond the group's usage requirements.
Dilapidations provision - £863k (2023 - £863k)
The group is required to identify if there are any lease agreements which they have entered into as a lessee which include an obligation within them for the group to incur costs at the end of the lease to reflect any damage to the premises in order to reinstate it to the original condition at the start of the lease. The group must estimate the cost of any such work required based on the condition of the property at the year-end and a provision should be included within the financial statements in advance for these costs. In arriving at this provision the group has regard to any quotes or estimates obtained specific to an individual property.
THE HARBRO GROUP LTD.
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 30 JUNE 2024
- 26 -
3
Turnover and other revenue
An analysis of the group's turnover is as follows:
2024
2023
£000
£000
Turnover analysed by class of business
Animal feedstuffs and agricultural supplies
142,126
145,377
Haulage contracting
2,864
2,599
144,990
147,976
2024
2023
£000
£000
Other significant revenue
Interest income
105
71
Sundry income
769
459
2024
2023
£000
£000
Turnover analysed by geographical market
United Kingdom
143,338
146,612
United States
70
105
Europe
1,490
987
Rest of the World
92
272
144,990
147,976
4
Operating profit
2024
2023
£000
£000
Operating profit for the year is stated after charging/(crediting):
Exchange gains
(17)
Depreciation of owned tangible fixed assets
2,082
2,195
Depreciation of tangible fixed assets held under finance leases
769
668
Profit on disposal of tangible fixed assets
(110)
(53)
Amortisation of intangible assets
340
432
Operating lease charges
1,335
2,421
5
Auditor's remuneration
2024
2023
Fees payable to the company's auditor and associates:
£000
£000
For audit services
Audit of the financial statements of the group and company
40
35
Audit of the financial statements of the company's subsidiaries
83
72
123
107
THE HARBRO GROUP LTD.
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 30 JUNE 2024
5
Auditor's remuneration
(Continued)
- 27 -
For other services
Other taxation services
5
3
All other non-audit services
5
3
10
6
For services in respect of associated pension schemes
Audit-related assurance services
2
2
6
Employees
The average monthly number of persons (including directors) employed by the group and company during the year was:
Group
Company
2024
2023
2024
2023
Number
Number
Number
Number
Production and distribution
337
334
-
-
Sales, administration and directors
112
114
2
2
449
448
2
2
Their aggregate remuneration comprised:
Group
Company
2024
2023
2024
2023
£000
£000
£000
£000
Wages and salaries
15,903
14,931
33
45
Social security costs
1,610
1,550
3
5
Pension costs
605
532
18,118
17,013
36
50
7
Directors' remuneration
2024
2023
£000
£000
Remuneration for qualifying services
1,021
838
The number of directors for whom retirement benefits are accruing under defined contribution schemes amounted to 3 (2023 - 3).
THE HARBRO GROUP LTD.
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 30 JUNE 2024
7
Directors' remuneration
(Continued)
- 28 -
Remuneration disclosed above includes the following amounts paid to the highest paid director:
2024
2023
£000
£000
Remuneration for qualifying services
204
178
8
Interest receivable and similar income
2024
2023
£000
£000
Interest income
Interest on bank deposits
105
71
Investment income includes the following:
Interest on financial assets not measured at fair value through profit or loss
105
71
9
Interest payable and similar expenses
2024
2023
£000
£000
Interest on financial liabilities measured at amortised cost:
Interest on bank overdrafts and loans
205
202
Other interest on financial liabilities
150
170
355
372
Other finance costs:
Interest on finance leases and hire purchase contracts
132
96
Other interest
21
5
Total finance costs
508
473
10
Taxation
2024
2023
£000
£000
Current tax
UK corporation tax on profits for the current period
1,371
1,080
Adjustments in respect of prior periods
(475)
(693)
Total current tax
896
387
THE HARBRO GROUP LTD.
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 30 JUNE 2024
10
Taxation
2024
2023
£000
£000
(Continued)
- 29 -
Deferred tax
Origination and reversal of timing differences
72
(32)
Adjustment in respect of prior periods
37
(1)
Total deferred tax
109
(33)
Total tax charge
1,005
354
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
£000
£000
Profit before taxation
5,216
4,009
Expected tax charge based on the standard rate of corporation tax in the UK of 25.00% (2023: 20.05%)
1,304
804
Tax effect of expenses that are not deductible in determining taxable profit
75
133
Adjustments in respect of prior years
(456)
(693)
Depreciation on assets not qualifying for tax allowances
104
117
Deferred tax adjustments in respect of prior years
18
(1)
Effect of change in average deferred tax rate
(6)
Chargeable gains
10
Effect of deferred tax not recognised
(50)
-
Taxation charge
1,005
354
A change in the UK Corporation tax rate to 25% took effect from 1 April 2023. This change has had a consequential effect on the group and company's tax charge with the standard rate of tax in the current year reflective of 25% and the prior year a marginal rate arising from the group and company's period straddling the 19% and 25% tax rates.
Deferred tax has been calculated using the rate effective in the period it is expected to reverse.
11
Dividends
2024
2023
Recognised as distributions to equity holders:
£000
£000
Interim paid
450
600
THE HARBRO GROUP LTD.
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 30 JUNE 2024
- 30 -
12
Intangible fixed assets
Group
Goodwill
£000
Cost
At 1 July 2023
4,839
Additions - business combinations
829
Disposals
(150)
At 30 June 2024
5,518
Amortisation and impairment
At 1 July 2023
3,955
Amortisation charged for the year
340
Disposals
(150)
At 30 June 2024
4,145
Carrying amount
At 30 June 2024
1,373
At 30 June 2023
884
The company had no intangible fixed assets at 30 June 2024 or 30 June 2023.
THE HARBRO GROUP LTD.
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 30 JUNE 2024
- 31 -
13
Tangible fixed assets
Group
Freehold land and buildings
Leasehold land and buildings
Leasehold Improvements
Plant and machinery
Fixtures, fittings & equipment
Motor vehicles
Total
£000
£000
£000
£000
£000
£000
£000
Cost
At 1 July 2023
5,856
2,423
58
22,797
5,472
7,939
44,545
Additions
570
468
1,362
2,400
Business combinations
576
54
76
262
968
Disposals
(356)
(22)
(1,085)
(1,463)
At 30 June 2024
5,856
2,999
58
23,065
5,994
8,478
46,450
Depreciation and impairment
At 1 July 2023
2,520
1,919
17
17,017
4,422
5,479
31,374
Depreciation charged in the year
226
85
5
1,220
538
777
2,851
Eliminated in respect of disposals
(262)
(22)
(918)
(1,202)
At 30 June 2024
2,746
2,004
22
17,975
4,938
5,338
33,023
Carrying amount
At 30 June 2024
3,110
995
36
5,090
1,056
3,140
13,427
At 30 June 2023
3,336
504
41
5,780
1,050
2,460
13,171
THE HARBRO GROUP LTD.
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 30 JUNE 2024
- 32 -
Company
Freehold land and buildings
Plant and machinery
Fixtures, fittings & equipment
Total
£000
£000
£000
£000
Cost
At 1 July 2023 and 30 June 2024
5,513
4,629
8
10,150
Depreciation and impairment
At 1 July 2023
2,316
3,510
8
5,834
Depreciation charged in the year
226
235
461
At 30 June 2024
2,542
3,745
8
6,295
Carrying amount
At 30 June 2024
2,971
884
3,855
At 30 June 2023
3,197
1,119
4,316
The net carrying value of tangible fixed assets includes the following in respect of assets held under finance leases or hire purchase contracts.
Group
Company
2024
2023
2024
2023
£000
£000
£000
£000
Plant and machinery
586
324
Fixtures, fittings & equipment
99
408
Motor vehicles
2,461
1,577
3,146
2,309
-
-
14
Fixed asset investments
Group
Company
2024
2023
2024
2023
Notes
£000
£000
£000
£000
Investments in subsidiaries
15
9,425
9,425
Unlisted investments
10
3
10
3
9,425
9,425
THE HARBRO GROUP LTD.
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 30 JUNE 2024
14
Fixed asset investments
(Continued)
- 33 -
Movements in fixed asset investments
Group
Investments
£000
Cost or valuation
At 1 July 2023
3
Additions
7
At 30 June 2024
10
Carrying amount
At 30 June 2024
10
At 30 June 2023
3
Movements in fixed asset investments
Company
Shares in subsidiaries
£000
Cost or valuation
At 1 July 2023 and 30 June 2024
9,425
Carrying amount
At 30 June 2024
9,425
At 30 June 2023
9,425
THE HARBRO GROUP LTD.
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 30 JUNE 2024
- 34 -
15
Subsidiaries
Details of the company's subsidiaries at 30 June 2024 are as follows:
Name of undertaking
Registered office
Nature of business
Class of
% Held
shares held
Direct
Indirect
*Agricultural and Ironmongery Supplies Limited
Scotland
Dormant
Ordinary
-
100.00
*Harbro Nutrition
Ireland
Animal Feed Distribution
Ordinary
-
100.00
*Tore Mill Limited
Scotland
Dormant
Ordinary
-
100.00
Feedmix Limited
Scotland
Dormant
Ordinary
100.00
-
Harbro Limited
Scotland
Animal Feed Manufacturers
Ordinary/ Preference
100.00
-
Harbro SRL
Italy
Animal Feed Distribution
Ordinary
100.00
-
Strathclyde Nutrition Ltd.
Scotland
Animal Feed and Chemicals
Ordinary
100.00
-
Transpan (Scotland) Limited
Scotland
Haulage Contractor
Ordinary
100.00
-
Murray Farmcare Limited
Scotland
Sale of animal feed and pet goods
Ordinary
-
100.00
Russell's Country Store Ltd
Scotland
Sale of pet goods and other related leisure
Ordinary
-
100.00
Russell's Country Store Ltd (Registration number: SC347251) and Murray Farmcare Limited (Registration number: SC225423) are exempt from the audit requirements of their individual accounts in relation to S479A of the Companies Act 2006 relating to subsidiary companies.
*Tore Mill Limited, Agricultural and Ironmongery Supplies Limited, Harbro Nutrition, Russell's Country Store Ltd and Murray Farmcare Limited are wholly owned subsidiaries of Harbro Limited.
16
Stocks
Group
Company
2024
2023
2024
2023
£000
£000
£000
£000
Raw materials and consumables
125
184
-
-
Finished goods and goods for resale
15,039
14,224
15,164
14,408
-
-
Stock is stated after provisions for impairment of £670k (2023- £659k).
THE HARBRO GROUP LTD.
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 30 JUNE 2024
- 35 -
17
Debtors
Group
Company
2024
2023
2024
2023
Amounts falling due within one year:
£000
£000
£000
£000
Trade debtors
19,097
18,364
10
17
Corporation tax recoverable
577
258
576
1,585
Amounts owed by group undertakings
-
-
1,269
760
Other debtors
4,909
5,577
167
59
Prepayments and accrued income
1,176
2,315
58
43
Deferred tax asset (note 23)
6
7
25,765
26,521
2,080
2,464
Trade debtors disclosed above are measured at amortised cost. Trade debtors are stated after provisions for impairment of £546k (2023- £460k). Bad debts of £6k (2023- £39k) have been written off through the profit and loss account in the year.
18
Current asset investments
Group
Company
2024
2023
2024
2023
£
£
£
£
Unlisted investments
100
100
100
100
19
Creditors: amounts falling due within one year
Group
Company
2024
2023
2024
2023
Notes
£000
£000
£000
£000
Bank loans and overdrafts
21
661
600
600
600
Obligations under finance leases
22
839
737
Other borrowings
21
200
200
Trade creditors
14,658
17,153
9
21
Amounts due to group undertakings
9,786
9,064
Corporation tax payable
1,144
Other taxation and social security
485
396
-
-
Other creditors
1,525
352
Accruals and deferred income
803
2,438
289
287
20,115
21,876
10,684
10,172
For details of secured creditors see note 21 and 22.
THE HARBRO GROUP LTD.
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 30 JUNE 2024
- 36 -
20
Creditors: amounts falling due after more than one year
Group
Company
2024
2023
2024
2023
Notes
£000
£000
£000
£000
Bank loans and overdrafts
21
1,838
2,400
1,800
2,400
Obligations under finance leases
22
1,097
750
Other borrowings
21
3,050
3,050
3,050
3,050
Other creditors
105
6,090
6,200
4,850
5,450
For details of secured creditors see note 21 and 22.
21
Loans and overdrafts
Group
Company
2024
2023
2024
2023
£000
£000
£000
£000
Bank loans
2,499
3,000
2,400
3,000
Preference shares
3,050
3,250
3,050
3,250
5,549
6,250
5,450
6,250
Payable within one year
661
800
600
800
Payable after one year
4,888
5,450
4,850
5,450
The group has in place a group wide £3,000k facility with quarterly repayments of £150k. Interest is payable at the annual rate of SONIA, plus 0.85% for the first four years and 1.85% thereafter. At the year end, £2,400k of this facility remains repayable.
The bank holds a bond and floating charge over the company's assets together with a standard security over certain of the group's properties.
Cross guarantees are currently in place with subsidiary companies.
The £3,050k of preference shares are reedemable at any time at the discretion of the group, provided that such redemption must occur by May 2028 with shareholders entitled to a fixed dividend of £0.075 per £1 nominal per annum. During the year £200k of preference shares were redeemed.
THE HARBRO GROUP LTD.
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 30 JUNE 2024
- 37 -
22
Finance lease obligations
Group
Company
2024
2023
2024
2023
£000
£000
£000
£000
Future minimum lease payments due under finance leases:
Within one year
987
737
In two to five years
949
750
1,936
1,487
-
-
Finance lease payments represent rental 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. All leases are on fixed repayment basis and no arrangements have been entered into for contingent rental payments.
Finance lease obligation are secured over the related assets.
23
Provisions for liabilities
Group
Company
2024
2023
2024
2023
£000
£000
£000
£000
Dilapidations
863
863
-
-
Deferred tax liabilities
24
868
666
289
340
1,731
1,529
289
340
The dilapidation provision relates to the obligation of the group to restore premises held under leases to their original condition on expiry of the lease. Further details can be found in note 2.
Further details on the deferred tax liabilities can be found in note 24.
24
Deferred taxation
Deferred tax assets and liabilities are offset where the group or company has a legally enforceable right to do so. The following is the analysis of the deferred tax balances (after offset) for financial reporting purposes:
Liabilities
Liabilities
Assets
Assets
2024
2023
2024
2023
Group
£000
£000
£000
£000
ACAs
1,353
1,140
6
5
Tax losses
-
(4)
-
-
Other timing differences
(485)
(470)
-
2
868
666
6
7
THE HARBRO GROUP LTD.
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 30 JUNE 2024
24
Deferred taxation
(Continued)
- 38 -
Liabilities
Liabilities
Assets
Assets
2024
2023
2024
2023
Company
£000
£000
£000
£000
ACAs
289
340
-
-
Group
Company
2024
2024
Movements in the year:
£000
£000
Liability at 1 July 2023
666
340
Charge/(credit) to profit or loss
202
(51)
Liability at 30 June 2024
868
289
Deferred tax has been calculated using the rate effective in the period it is expected to reverse.
25
Retirement benefit schemes
2024
2023
Defined contribution schemes
£000
£000
Charge to profit or loss in respect of defined contribution schemes
605
532
Defined contribution pension schemes are operated for all qualifying employees. The assets of the schemes are held separately from those of the group in independently administered funds.
26
Share capital
Group and Company
2024
2023
Ordinary share capital
£
£
Issued and fully paid
309,996 Ordinary shares of £1 each
310
310
3,691 B Ordinary shares of £1 each
4
6
314
316
The above redeemable shares can be redeemed at any time at the sole option of the company. These shares carry no fixed entitlement to dividends and no voting rights.
During the year, there was a buy back of 2,001 ordinary shares.
27
Share premium account
The share premium account records the amount above the nominal value received for shares sold, less transaction costs.
28
Capital redemption reserve
THE HARBRO GROUP LTD.
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 30 JUNE 2024
28
Capital redemption reserve
(Continued)
- 39 -
The capital redemption reserve records the nominal value of shares repurchased by the company, other than where the repurchase of shares is funded by a fresh issues of share capital.
29
Profit and loss reserves
The profit and loss reserves represents accumulated profits less distributions.
30
Acquisition of a business
On 25 June 2024 the group acquired 100 percent of the issued capital of Murray Farmcare Limited
Book Value
Adjustments
Fair Value
Net assets acquired
£000
£000
£000
Goodwill
275
-
275
Property, plant and equipment
975
-
975
Investments
7
-
7
Stock
1,136
-
1,136
Trade and other receivables
2,001
-
2,001
Cash and cash equivalents
412
-
412
Bank loans
(97)
-
(97)
Obligations under finance leases
(222)
-
(222)
Trade and other payables
(3,915)
-
(3,915)
Tax liabilities
1
-
1
Deferred tax
(92)
-
(92)
Total identifiable net assets
481
-
481
Goodwill
553
Total consideration
1,034
The consideration was satisfied by:
£000
Cash
1,034
Contribution by the acquired business for the reporting period included in the group statement of comprehensive income since acquisition:
£000
Turnover
-
Profit after tax
-
The useful life of the goodwill has been estimated at 10 years.
THE HARBRO GROUP LTD.
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 30 JUNE 2024
- 40 -
31
Financial commitments, guarantees and contingent liabilities
Under S.479C of the Companies Act 2006 Harbro Limited has provided a guarantee to Russell's Country Store Ltd and Murray Farmcare Limited, which are exempt from the requirement of this act relating to the audit of individual accounts by virtue of S479A.
32
Operating lease commitments
Lessee
At the year end the group held operating leases in relation to the rental of properties and other equipment.
At the reporting end date the group had outstanding commitments for future minimum lease payments under non-cancellable operating leases, which fall due as follows:
Group
Company
2024
2023
2024
2023
£000
£000
£000
£000
Within one year
2,496
1,765
35
35
Between two and five years
6,643
2,735
140
140
In over five years
4,353
1,311
193
228
13,492
5,811
368
403
33
Capital commitments
Amounts contracted for but not provided in the financial statements:
Group
Company
2024
2023
2024
2023
£000
£000
£000
£000
Acquisition of tangible fixed assets
1,412
741
-
-
34
Events after the reporting date
Subsequent to the year-end, The Harbro Group Limited entered into an agreement with Convent Capital for a private equity buyout transaction.This transaction will be accounted for in accordance with the applicable financial reporting standards. The financial statements do not include any adjustments related to the effects of the buyout, as the buyout occurred after the balance sheet date.
35
Related party transactions
Remuneration of key management personnel
The remuneration of key management personnel is as follows.
2024
2023
£000
£000
Aggregate compensation
2,500
2,111
THE HARBRO GROUP LTD.
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 30 JUNE 2024
35
Related party transactions
(Continued)
- 41 -
Transactions with related parties
During the year the group entered into the following transactions with related parties:
Sales
Purchases
2024
2023
2024
2023
£000
£000
£000
£000
Group
Key management personnel
10
8
55
23
Other related parties
9
7
47
33
Company
Other related parties
-
-
26
53
Share redemption
Lease payments
2024
2023
2024
2023
£000
£000
£000
£000
Group
Other related parties
214
214
385
328
Company
Other related parties
-
-
150
147
The following amounts were outstanding at the reporting end date:
Amounts due to related parties
2024
2023
£000
£000
Group
Other related parties
3,091
3,269
Company
Other related parties
3,068
3,250
The following amounts were outstanding at the reporting end date:
36
Directors' transactions
Dividends totalling £250k (2023 - £343k) were paid in the year in respect of shares held by the company's directors.
THE HARBRO GROUP LTD.
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 30 JUNE 2024
- 42 -
37
Cash generated from group operations
2024
2023
£000
£000
Profit for the year after tax
4,211
3,655
Adjustments for:
Taxation charged
1,005
354
Finance costs
508
473
Investment income
(105)
(71)
Gain on disposal of tangible fixed assets
(110)
(53)
Amortisation and impairment of intangible assets
340
432
Depreciation and impairment of tangible fixed assets
2,851
2,863
Decrease in provisions
-
(327)
Movements in working capital:
Decrease in stocks
380
1,077
Decrease/(increase) in debtors
3,075
(3,879)
(Decrease)/increase in creditors
(6,680)
1,118
Cash generated from operations
5,475
5,642
38
Analysis of changes in net debt - group
1 July 2023
Cash flows
Other non-cash changes
30 June 2024
£000
£000
£000
£000
Cash at bank and in hand
1,745
1,124
-
2,869
Borrowings excluding overdrafts
(6,250)
701
-
(5,549)
Obligations under finance leases
(1,487)
506
(955)
(1,936)
(5,992)
2,331
(955)
(4,616)
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