Company registration number NI602522 (Northern Ireland)
CHESTNUTT ANIMAL FEEDS LIMITED
ANNUAL REPORT AND FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 AUGUST 2024
CHESTNUTT ANIMAL FEEDS LIMITED
CONTENTS
Page
Company Information
1
Strategic report
2 - 3
Directors' report
4 - 5
Independent auditor's report
6 - 8
Statement of comprehensive income
9
Balance sheet
10
Statement of changes in equity
11
Statement of cash flows
12
Notes to the financial statements
13 - 25
CHESTNUTT ANIMAL FEEDS LIMITED
COMPANY INFORMATION
- 1 -
Directors
Mr J Chestnutt
Mrs D Chestnutt
Mr D Dunlop
Mr D McKay
Mr N McConaghie
Secretary
Mr J Chestnutt
Company number
NI602522
Registered office
The Mill
55 Main Street
Stranocum
Ballymoney
BT53 8PQ
Auditor
Moore (N.I.) LLP
30-32 Lodge Road
Coleraine
BT52 1NB
Bankers
Danske Bank
6 High Street
Ballymoney
Co. Antrim
BT53 6AD
Danske Bank ICS
3rd Floor
3 Harbourmaster Place
IFSC
Dublin 1
HSBC Bank PLC
20-22 Railway Road
Coleraine
Londonderry
BT52 1PD
Solicitors
Anderson Gillan Barr Limited
5 Linenhall Street
Ballymoney
County Antrim
BT53 6DP
CHESTNUTT ANIMAL FEEDS LIMITED
STRATEGIC REPORT
FOR THE YEAR ENDED 31 AUGUST 2024
- 2 -
The directors present the strategic report for the year ended 31 August 2024.
Principal activities
The principal activity of the company continued to be that of the manufacturing of prepared food for farm animals. There were no significant changes in the business activities during the year.
Review of business
Turnover for the year is £35,936,540 compared to £41,785,704 for the previous year. This represents a decrease in turnover of 14.00%. Despite this decrease in turnover due to a fall in the price for feeds, the company remained profitable with a Gross Profit margin of 11.6% (11.1% in 2023). The directors consider the results for the year to be satisfactory. The company will continue to seek every opportunity to increase profitable turnover.
Risks and uncertainties
The company's operations expose it to a variety of financial risks that include price risk, foreign exchange risk, credit risk, liquidity risk and interest rate risk. The company has in place a risk management programme that seeks to limit the adverse effects on the financial performance of the company by monitoring levels of debt finance and the related finance costs.
Given the size of the company, the directors have assumed responsibility for the monitoring of financial risk management.
Price risk
The company is exposed to commodity price risk as a result of its operations. However, given the size of the company's operations, the costs of managing exposure to commodity price risk exceed any potential benefits. The directors will revisit the appropriateness of this policy should the company's operations change in size or nature. The company has no exposure to equity securities price risk as it holds no listed investments.
Foreign exchange risk
A proportion of the company's trading is conducted in foreign currency. However, any exposure to foreign exchange risk in the normal course of business is deemed to be immaterial.
Credit risk
The company is exposed to credit risk due to its policy of giving credit to customers. In these instances the company has implemented policies that require appropriate credit checks on potential customers before sales are made. The amount of exposure to individual customers is subject to a limit, which is reassessed regularly by the directors.
Liquidity risk
The company actively maintains a mixture of long-term and short-term debt finance that is designed to ensure the company has sufficient available funds for operations and planned expansions.
Interest rate cash flow risk
The company has interest bearing liabilities. The company has a policy of monitoring its debt finance to ensure certainty of future interest cash flows. The directors will revisit the appropriateness of this policy should the company's operations change in size or nature or otherwise be deemed necessary.
CHESTNUTT ANIMAL FEEDS LIMITED
STRATEGIC REPORT (CONTINUED)
FOR THE YEAR ENDED 31 AUGUST 2024
- 3 -
Key performance indicators
2024
2023
Turnover
£35,936,540
£41,785,704
Gross margin percentage
11.63%
11.05%
Operating profit
£1,166,395
£1,958,260
The key performance indicators used by the directors are turnover, gross margin percentage and operating profit. These are set out above. The directors consider the results for the year to be satisfactory.
Mr J Chestnutt
Director
13 December 2024
CHESTNUTT ANIMAL FEEDS LIMITED
DIRECTORS' REPORT
FOR THE YEAR ENDED 31 AUGUST 2024
- 4 -
The directors present their annual report and financial statements for the year ended 31 August 2024.
Results and dividends
The results for the year are set out on page 9.
Ordinary dividends were paid amounting to £186,000. The directors do not recommend payment of a final dividend.
Directors
The directors who held office during the year and up to the date of signature of the financial statements were as follows:
Mr J Chestnutt
Mrs D Chestnutt
Mr D Dunlop
Mr D McKay
Mr N McConaghie
Future developments
The company plans to continue to further drive efficiency levels in the production and distribution facilities, thus leading to increased levels of turnover, gross profit margin and operating profits.
Auditor
The auditor, Moore (N.I.) LLP, are deemed to be reappointed under section 487(2) of the Companies Act 2006.
Statement of directors' responsibilities
The directors are responsible for preparing the annual report and the financial statements in accordance with applicable law and regulations.
Company law requires the directors to prepare financial statements for each financial year. Under that law the directors have elected to prepare the financial statements in accordance with United Kingdom Generally Accepted Accounting Practice (United Kingdom Accounting Standards and applicable law). Under company law the directors must not approve the financial statements unless they are satisfied that they give a true and fair view of the state of affairs of the company and of the profit or loss of the company for that period. In preparing these financial statements, the directors are required to:
select suitable accounting policies and then apply them consistently;
make judgements and accounting estimates that are reasonable and prudent;
prepare the financial statements on the going concern basis unless it is inappropriate to presume that the company will continue in business.
The directors are responsible for keeping adequate accounting records that are sufficient to show and explain the company’s transactions and disclose with reasonable accuracy at any time the financial position of the company and enable them to ensure that the financial statements comply with the Companies Act 2006. They are also responsible for safeguarding the assets of the company and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.
Statement of disclosure to auditor
So far as each person who was a director at the date of approving this report is aware, there is no relevant audit information of which the company’s auditor is unaware. Additionally, the directors individually have taken all the necessary steps that they ought to have taken as directors in order to make themselves aware of all relevant audit information and to establish that the company’s auditor is aware of that information.
Medium-sized companies exemption
This report has been prepared in accordance with the provisions applicable to companies entitled to the medium-sized companies exemption.
CHESTNUTT ANIMAL FEEDS LIMITED
DIRECTORS' REPORT (CONTINUED)
FOR THE YEAR ENDED 31 AUGUST 2024
- 5 -
On behalf of the board
Mr J Chestnutt
Director
13 December 2024
CHESTNUTT ANIMAL FEEDS LIMITED
INDEPENDENT AUDITOR'S REPORT
TO THE MEMBERS OF CHESTNUTT ANIMAL FEEDS LIMITED
- 6 -
Opinion
We have audited the financial statements of Chestnutt Animal Feeds Limited (the 'company') for the year ended 31 August 2024 which comprise the statement of comprehensive income, the balance sheet, the statement of changes in equity, the statement of cash flows and notes to the financial statements, including significant accounting policies. The financial reporting framework that has been applied in their preparation is applicable law and United Kingdom Accounting Standards, including Financial Reporting Standard 102 The Financial Reporting Standard applicable in the UK and Republic of Ireland (United Kingdom Generally Accepted Accounting Practice).
In our opinion the financial statements:
give a true and fair view of the state of the company's affairs as at 31 August 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.
CHESTNUTT ANIMAL FEEDS LIMITED
INDEPENDENT AUDITOR'S REPORT
TO THE MEMBERS OF CHESTNUTT ANIMAL FEEDS LIMITED (CONTINUED)
- 7 -
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 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, 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.
The extent to which our procedures are capable of detecting irregularities, including fraud, is detailed below.
Explanation as to what extent the audit was considered capable of detecting irregularities, including fraud
The objectives of our audit in respect of fraud, are; to identify and assess the risks of material misstatement of the financial statements due to fraud; to obtain sufficient appropriate audit evidence regarding the assessed risks of material misstatement due to fraud, through designing and implementing appropriate responses to those assessed risks; and to respond appropriately to instances of fraud or suspected fraud identified during the audit. However, the primary responsibility for the prevention and detection of fraud rests with both management and those charged with governance of the company.
Our approach was as follows:
We obtained an understanding of the legal and regulatory requirements applicable to the company and considered that the most significant are the Companies Act 2006, UK financial reporting standards as issued by the Financial Reporting Council, and UK taxation legislation.
We obtained an understanding of how the company complies with these requirements by discussions with management and those charged with governance.
We assessed the risk of material misstatement of the financial statements, including the risk of material misstatement due to fraud and how it might occur, by holding discussions with management and those charged with governance.
We inquired of management and those charged with governance as to any known instances of non-compliance or suspected non-compliance with laws and regulations.
Based on this understanding, we designed specific appropriate audit procedures to identify instances of non-compliance with laws and regulations. This included making enquiries of management and those charged with governance and obtaining additional corroborative evidence as required.
We tested the completeness of sales to address the risk of fraud in revenue recognition.
CHESTNUTT ANIMAL FEEDS LIMITED
INDEPENDENT AUDITOR'S REPORT
TO THE MEMBERS OF CHESTNUTT ANIMAL FEEDS LIMITED (CONTINUED)
- 8 -
As part of an audit in accordance with ISAs (UK) we exercise professional judgement and maintain professional scepticism throughout the audit. We also:
Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.
Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purposes of expressing an opinion on the effectiveness of the company’s internal control.
Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by the directors.
Conclude on the appropriateness of the directors’ use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the company’s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor’s report to the related disclosures in the financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor’s report. However, future events or conditions may cause the company to cease to continue as a going concern.
Evaluate the overall presentation, structure and content of the financial statements, including the disclosures, and whether the financial statements represent the underlying transactions and events in a manner that achieves fair presentation.
We communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit.
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.
The purpose of our audit work and to whom we owe our responsibilities
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.
Dr R I Peters Gallagher OBE FCA
Senior Statutory Auditor
For and on behalf of Moore (N.I.) LLP
13 December 2024
Chartered Accountants
Statutory Auditor
30-32 Lodge Road
Coleraine
BT52 1NB
CHESTNUTT ANIMAL FEEDS LIMITED
STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEAR ENDED 31 AUGUST 2024
- 9 -
2024
2023
Notes
£
£
Turnover
3
35,936,540
41,785,704
Cost of sales
(31,755,400)
(37,168,666)
Gross profit
4,181,140
4,617,038
Administrative expenses
(3,014,745)
(2,664,578)
Other operating income
5,800
Operating profit
4
1,166,395
1,958,260
Interest receivable and similar income
7
96,944
12,280
Interest payable and similar expenses
8
(50,061)
(52,754)
Profit before taxation
1,213,278
1,917,786
Tax on profit
9
(324,556)
(303,240)
Profit for the financial year
888,722
1,614,546
The profit and loss account has been prepared on the basis that all operations are continuing operations.
CHESTNUTT ANIMAL FEEDS LIMITED
BALANCE SHEET
AS AT 31 AUGUST 2024
31 August 2024
- 10 -
2024
2023
Notes
£
£
£
£
Fixed assets
Tangible assets
12
3,873,036
3,222,035
3,873,036
3,222,035
Current assets
Stocks
13
996,154
1,132,975
Debtors
14
3,563,933
4,090,315
Cash at bank and in hand
4,899,456
3,421,594
9,459,543
8,644,884
Creditors: amounts falling due within one year
15
(2,351,247)
(1,702,644)
Net current assets
7,108,296
6,942,240
Total assets less current liabilities
10,981,332
10,164,275
Creditors: amounts falling due after more than one year
16
(466,374)
(498,496)
Provisions for liabilities
18
(769,357)
(622,900)
Net assets
9,745,601
9,042,879
Capital and reserves
Called up share capital
21
2
2
Profit and loss reserves
9,745,599
9,042,877
Total equity
9,745,601
9,042,879
The financial statements were approved by the board of directors and authorised for issue on 13 December 2024 and are signed on its behalf by:
Mr J Chestnutt
Director
Company Registration No. NI602522
The notes on pages 13 - 25 form part of these financial statements and should be read in conjunction therewith.
CHESTNUTT ANIMAL FEEDS LIMITED
STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 AUGUST 2024
- 11 -
Share capital
Profit and loss reserves
Total
Notes
£
£
£
Balance at 1 September 2022
2
7,588,331
7,588,333
Year ended 31 August 2023:
Profit and total comprehensive income for the year
-
1,614,546
1,614,546
Dividends
10
-
(160,000)
(160,000)
Balance at 31 August 2023
2
9,042,877
9,042,879
Year ended 31 August 2024:
Profit and total comprehensive income for the year
-
888,722
888,722
Dividends
10
-
(186,000)
(186,000)
Balance at 31 August 2024
2
9,745,599
9,745,601
CHESTNUTT ANIMAL FEEDS LIMITED
STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED 31 AUGUST 2024
- 12 -
2024
2023
Notes
£
£
£
£
Cash flows from operating activities
Cash generated from operations
25
3,042,273
2,022,402
Interest paid
(50,061)
(52,754)
Income taxes paid
(60,938)
(382,955)
Net cash inflow from operating activities
2,931,274
1,586,693
Investing activities
Purchase of tangible fixed assets
(1,453,715)
(1,371,333)
Proceeds from disposal of tangible fixed assets
47,000
104,700
Repayment of loans
300,524
(300,524)
Interest received
96,944
12,280
Net cash used in investing activities
(1,009,247)
(1,554,877)
Financing activities
Payment of finance leases obligations
(258,165)
(100,648)
Dividends paid
(186,000)
(160,000)
Net cash used in financing activities
(444,165)
(260,648)
Net increase/(decrease) in cash and cash equivalents
1,477,862
(228,832)
Cash and cash equivalents at beginning of year
3,421,594
3,650,426
Cash and cash equivalents at end of year
4,899,456
3,421,594
CHESTNUTT ANIMAL FEEDS LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 AUGUST 2024
- 13 -
1
Accounting policies
Company information
Chestnutt Animal Feeds Limited is a private company limited by shares incorporated in Northern Ireland. The registered office is The Mill, 55 Main Street, Stranocum, Ballymoney, BT53 8PQ.
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 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 is recognised at the fair value of the consideration received or receivable for goods and services provided in the normal course of business, and is shown net of VAT and other sales related taxes. The fair value of consideration takes into account trade discounts, settlement discounts and volume rebates.
Revenue from the sale of goods is recognised when the significant risks and rewards of ownership of the goods have passed to the buyer (usually on dispatch of the goods), the amount of revenue can be measured reliably, it is probable that the economic benefits associated with the transaction will flow to the entity and the costs incurred or to be incurred in respect of the transaction can be measured reliably.
1.4
Intangible fixed assets - goodwill
Goodwill represents the excess of the cost of acquisition of unincorporated businesses over the fair value of net assets acquired. It is initially recognised as an asset at cost and is subsequently measured at cost less accumulated amortisation and accumulated impairment losses. Goodwill is considered to have a finite useful life and is amortised on a systematic basis over its expected life, which is 10 years.
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:
Land and buildings
10% Straight Line
Plant and machinery
20% Reducing Balance
Office equipment
20% Reducing Balance
Motor vehicles
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 credited or charged to profit or loss.
CHESTNUTT ANIMAL FEEDS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 AUGUST 2024
1
Accounting policies
(Continued)
- 14 -
1.6
Impairment of fixed assets
At each reporting period end date, the company 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). Where it is not possible to estimate the recoverable amount of an individual asset, the company estimates the recoverable amount of the cash-generating unit to which the asset belongs.
Recoverable amount is the higher of fair value less costs to sell and value in use. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset for which the estimates of future cash flows have not been adjusted.
If the recoverable amount of an asset (or cash-generating unit) is estimated to be less than its carrying amount, the carrying amount of the asset (or cash-generating unit) is reduced to its recoverable amount. An impairment loss is recognised immediately in profit or loss, unless the relevant asset is carried at a revalued amount, in which case the impairment loss is treated as a revaluation decrease.
Recognised impairment losses are reversed if, and only if, the reasons for the impairment loss have ceased to apply. Where an impairment loss subsequently reverses, the carrying amount of the asset (or cash-generating unit) is increased to the revised estimate of its recoverable amount, but so that the increased carrying amount does not exceed the carrying amount that would have been determined had no impairment loss been recognised for the asset (or cash-generating unit) in prior years. A reversal of an impairment loss is recognised immediately in profit or loss, unless the relevant asset is carried at a revalued amount, in which case the reversal of the impairment loss is treated as a revaluation increase.
1.7
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 profit or loss.
1.8
Cash and cash equivalents
Cash and cash equivalents are basic financial assets and include cash in hand, deposits held at call with banks, other short-term liquid investments with original maturities of three months or less, and bank overdrafts. Bank overdrafts are shown within borrowings in current liabilities.
1.9
Financial instruments
The company has elected to apply the provisions of Section 11 ‘Basic Financial Instruments’ and Section 12 ‘Other Financial Instruments Issues’ of FRS 102 to all of its financial instruments.
Financial instruments are recognised in the company's balance sheet when the company becomes party to the contractual provisions of the instrument.
Financial assets and liabilities are offset, with the net amounts presented in the financial statements, when there is a legally enforceable right to set off the recognised amounts and there is an intention to settle on a net basis or to realise the asset and settle the liability simultaneously.
CHESTNUTT ANIMAL FEEDS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 AUGUST 2024
1
Accounting policies
(Continued)
- 15 -
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, associates or joint ventures, are initially measured at fair value, which is normally the transaction price. Such assets are subsequently carried at fair value and the changes in fair value are recognised in profit or loss, except that investments in equity instruments that are not publicly traded and whose fair values cannot be measured reliably are measured at cost less impairment.
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.
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.
CHESTNUTT ANIMAL FEEDS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 AUGUST 2024
1
Accounting policies
(Continued)
- 16 -
Other financial liabilities
Derivatives, including interest rate swaps and forward foreign exchange contracts, are not basic financial instruments. Derivatives are initially recognised at fair value on the date a derivative contract is entered into and are subsequently re-measured at their fair value. Changes in the fair value of derivatives are recognised in profit or loss in finance costs or finance income as appropriate, unless hedge accounting is applied and the hedge is a cash flow hedge.
Debt instruments that do not meet the conditions in FRS 102 paragraph 11.9 are subsequently measured at fair value through profit or loss. Debt instruments may be designated as being measured at fair value through profit or loss to eliminate or reduce an accounting mismatch or if the instruments are measured and their performance evaluated on a fair value basis in accordance with a documented risk management or investment strategy.
Derecognition of financial liabilities
Financial liabilities are derecognised when the company’s contractual obligations expire or are discharged or cancelled.
1.10
Equity instruments
Equity instruments issued by the company are recorded at the proceeds received, net of transaction costs. Dividends payable on equity instruments are recognised as liabilities once they are no longer at the discretion of the company.
1.11
Taxation
The tax expense represents the sum of the tax currently payable and deferred tax.
Current tax
The tax currently payable is based on taxable profit for the year. Taxable profit differs from net profit as reported in the profit and loss account because it excludes items of income or expense that are taxable or deductible in other years and it further excludes items that are never taxable or deductible. The company’s liability for current tax is calculated using tax rates that have been enacted or substantively enacted by the reporting end date.
Deferred tax
Deferred tax liabilities are generally recognised for all timing differences and deferred tax assets are recognised to the extent that it is probable that they will be recovered against the reversal of deferred tax liabilities or other future taxable profits. Such assets and liabilities are not recognised if the timing difference arises from goodwill or from the initial recognition of other assets and liabilities in a transaction that affects neither the tax profit nor the accounting profit.
The carrying amount of deferred tax assets is reviewed at each reporting end date and reduced to the extent that it is no longer probable that sufficient taxable profits will be available to allow all or part of the asset to be recovered. Deferred tax is calculated at the tax rates that are expected to apply in the period when the liability is settled or the asset is realised. Deferred tax is charged or credited in the profit and loss account, except when it relates to items charged or credited directly to equity, in which case the deferred tax is also dealt with in equity. Deferred tax assets and liabilities are offset when the company has a legally enforceable right to offset current tax assets and liabilities and the deferred tax assets and liabilities relate to taxes levied by the same tax authority.
CHESTNUTT ANIMAL FEEDS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 AUGUST 2024
1
Accounting policies
(Continued)
- 17 -
1.12
Employee benefits
The costs of short-term employee benefits are recognised as a liability and an expense, unless those costs are required to be recognised as part of the cost of stock or fixed assets.
The cost of any unused holiday entitlement is recognised in the period in which the employee’s services are received.
Termination benefits are recognised immediately as an expense when the company is demonstrably committed to terminate the employment of an employee or to provide termination benefits.
1.13
Retirement benefits
Payments to defined contribution retirement benefit schemes are charged as an expense as they fall due.
1.14
Leases
Leases are classified as finance leases whenever the terms of the lease transfer substantially all the risks and rewards of ownership to the lessees. All other leases are classified as operating leases.
Assets held under finance leases are recognised as assets at the lower of the assets fair value at the date of inception and the present value of the minimum lease payments. The related liability is included in the balance sheet as a finance lease obligation. Lease payments are treated as consisting of capital and interest elements. The interest is charged to profit or loss so as to produce a constant periodic rate of interest on the remaining balance of the liability.
1.15
Government grants
Government grants are recognised at the fair value of the asset received or receivable when there is reasonable assurance that the grant conditions will be met and the grants will be received.
A grant that specifies performance conditions is recognised in income when the performance conditions are met. Where a grant does not specify performance conditions it is recognised in income when the proceeds are received or receivable. A grant received before the recognition criteria are satisfied is recognised as a liability.
1.16
Foreign exchange
Transactions in currencies other than pounds sterling are recorded at the rates of exchange prevailing at the dates of the transactions. At each reporting end date, monetary assets and liabilities that are denominated in foreign currencies are retranslated at the rates prevailing on the reporting end date. Gains and losses arising on translation in the period are included in profit or loss.
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.
CHESTNUTT ANIMAL FEEDS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 AUGUST 2024
- 18 -
3
Turnover and other revenue
2024
2023
£
£
Turnover analysed by class of business
Sale of goods
35,936,540
41,785,704
2024
2023
£
£
Other revenue
Interest income
96,944
12,280
Grants received
-
5,800
The directors have not disclosed market information as they believe it would be seriously prejudicial to the interests of the company to disclose such information.
4
Operating profit
2024
2023
Operating profit for the year is stated after charging/(crediting):
£
£
Exchange losses
592
102
Government grants
-
(5,800)
Fees payable to the company's auditor for the audit of the company's financial statements
11,000
11,000
Depreciation of owned tangible fixed assets
811,417
631,692
Depreciation of tangible fixed assets held under finance leases
201,234
197,030
Profit on disposal of tangible fixed assets
(1,746)
(20,293)
5
Employees
The average monthly number of persons (including directors) employed by the company during the year was:
2024
2023
Number
Number
28
28
Their aggregate remuneration comprised:
2024
2023
£
£
Wages and salaries
1,124,444
1,057,464
Social security costs
120,945
113,377
Pension costs
144,619
140,244
1,390,008
1,311,085
CHESTNUTT ANIMAL FEEDS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 AUGUST 2024
- 19 -
6
Directors' remuneration
2024
2023
£
£
Remuneration for qualifying services
216,751
195,256
Company pension contributions to defined contribution schemes
122,935
120,290
339,686
315,546
Remuneration disclosed above include the following amounts paid to the highest paid director:
2024
2023
£
£
Remuneration for qualifying services
83,303
76,526
Company pension contributions to defined contribution schemes
2,499
2,296
7
Interest receivable and similar income
2024
2023
£
£
Interest income
Interest on bank deposits
93,479
8,519
Other interest income
3,465
3,761
Total income
96,944
12,280
2024
2023
Investment income includes the following:
£
£
Interest on financial assets not measured at fair value through profit or loss
93,479
8,519
8
Interest payable and similar expenses
2024
2023
£
£
Interest on financial liabilities measured at amortised cost:
Interest on bank overdrafts and loans
14,184
28,529
Other finance costs:
Interest on finance leases and hire purchase contracts
35,877
24,225
50,061
52,754
CHESTNUTT ANIMAL FEEDS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 AUGUST 2024
- 20 -
9
Taxation
2024
2023
£
£
Current tax
UK corporation tax on profits for the current period
187,092
69,931
Adjustments in respect of prior periods
(8,993)
(53,241)
Total current tax
178,099
16,690
Deferred tax
Origination and reversal of timing differences
146,457
286,550
Total tax charge
324,556
303,240
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
1,213,278
1,917,786
Expected tax charge based on the standard rate of corporation tax in the UK of 25.00% (2023: 25.00%)
303,320
479,447
Tax effect of expenses that are not deductible in determining taxable profit
1,465
1,755
Adjustments in respect of prior years
(8,993)
(53,241)
Effect of change in corporation tax rate
(11,329)
Depreciation on assets not qualifying for tax allowances
28,764
27,446
Other tax adjustments
(140,838)
Taxation charge for the year
324,556
303,240
10
Dividends
2024
2023
£
£
Interim paid
186,000
160,000
CHESTNUTT ANIMAL FEEDS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 AUGUST 2024
- 21 -
11
Intangible fixed assets
Goodwill
£
Cost
At 1 September 2023 and 31 August 2024
800,000
Amortisation and impairment
At 1 September 2023 and 31 August 2024
800,000
Carrying amount
At 31 August 2024
At 31 August 2023
12
Tangible fixed assets
Land and buildings
Plant and machinery
Office equipment
Motor vehicles
Total
£
£
£
£
£
Cost
At 1 September 2023
1,070,461
2,988,594
36,649
2,717,756
6,813,460
Additions
45,060
1,229,233
434,613
1,708,906
Disposals
(119,650)
(119,650)
At 31 August 2024
1,115,521
4,217,827
36,649
3,032,719
8,402,716
Depreciation and impairment
At 1 September 2023
426,369
1,345,267
28,310
1,791,479
3,591,425
Depreciation charged in the year
107,562
574,512
1,668
328,909
1,012,651
Eliminated in respect of disposals
(74,396)
(74,396)
At 31 August 2024
533,931
1,919,779
29,978
2,045,992
4,529,680
Carrying amount
At 31 August 2024
581,590
2,298,048
6,671
986,727
3,873,036
At 31 August 2023
644,092
1,643,327
8,339
926,277
3,222,035
The net carrying value of tangible fixed assets includes the following in respect of assets held under finance leases or hire purchase contracts.
2024
2023
£
£
Plant and machinery
66,528
83,160
Motor vehicles
553,807
528,719
620,335
611,879
All deeds are presently with HSBC Bank plc who hold a charge over the property at 55 Main Street Stranocum.
CHESTNUTT ANIMAL FEEDS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 AUGUST 2024
- 22 -
13
Stocks
2024
2023
£
£
Finished goods and goods for resale
996,154
1,132,975
14
Debtors
2024
2023
Amounts falling due within one year:
£
£
Trade debtors
3,435,648
3,694,565
Seacon Beg Farm Limited
18,555
17,360
Other debtors
91,512
359,575
Prepayments and accrued income
18,218
18,815
3,563,933
4,090,315
15
Creditors: amounts falling due within one year
2024
2023
£
£
Obligations under finance leases
17
191,566
162,418
Trade creditors
1,855,993
1,421,108
Corporation tax
187,092
69,931
Other taxation and social security
35,151
27,376
Other creditors
12
Accruals and deferred income
81,433
21,811
2,351,247
1,702,644
16
Creditors: amounts falling due after more than one year
2024
2023
£
£
Obligations under finance leases
17
466,374
498,496
17
Finance lease obligations
2024
2023
Future minimum lease payments due under finance leases:
£
£
Within one year
222,948
196,069
In two to five years
503,718
551,328
726,666
747,397
Less: future finance charges
(68,726)
(86,483)
657,940
660,914
CHESTNUTT ANIMAL FEEDS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 AUGUST 2024
17
Finance lease obligations
(Continued)
- 23 -
Finance lease payments represent rentals payable by the company for certain items of plant and machinery and 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.
18
Provisions for liabilities
2024
2023
£
£
Deferred tax liabilities
19
769,357
622,900
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
769,357
622,900
2024
Movements in the year:
£
Liability at 1 September 2023
622,900
Charge to profit or loss
146,457
Liability at 31 August 2024
769,357
The net deferred tax liability expected to reverse in 12 months is £167,126. This primarily relates to the reversal of tax timing differences on capital allowances.
20
Retirement benefit schemes
2024
2023
Defined contribution schemes
£
£
Charge to profit or loss in respect of defined contribution schemes
144,619
140,244
The company operates a defined contribution pension scheme for all qualifying employees. The assets of the scheme are held separately from those of the company in an independently administered fund.
21
Share capital
2024
2023
2024
2023
Ordinary share capital
Number
Number
£
£
Issued and fully paid
Ordinary Shares of £1 each
2
2
2
2
CHESTNUTT ANIMAL FEEDS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 AUGUST 2024
21
Share capital
(Continued)
- 24 -
The company has one class of ordinary shares which carry full voting rights, entitles the holders to full rights to participate in dividends as voted and entitles holders to full rights to participate in a distribution.
22
Related party transactions
Remuneration of key management personnel
The remuneration of key management personnel is as follows.
2024
2023
£
£
Aggregate compensation
339,685
315,545
Transactions with related parties
During the year the company entered into the following transactions with related parties:
At the year end a balance of £18,555 (2023 £17,360) was owed from Seacon Beg Farm Limited a company with common shareholders who are also directors of this company.
During the year the company made pension contributions totalling £122,935 (2023 £120,290) in respect of the directors and shareholders of the company.
During the year the company purchased land from a director with a value of £35,000.
23
Directors' transactions
Dividends totalling £186,000 (2023 - £160,000) were paid in the year in respect of shares held by the company's directors.
24
Ultimate controlling party
Mr James Chestnutt and Mrs Doreen Chestnutt are the ultimate controlling parties.
CHESTNUTT ANIMAL FEEDS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 AUGUST 2024
- 25 -
25
Cash generated from operations
2024
2023
£
£
Profit for the year after tax
888,722
1,614,546
Adjustments for:
Taxation charged
324,556
303,240
Finance costs
50,061
52,754
Investment income
(96,944)
(12,280)
Gain on disposal of tangible fixed assets
(1,746)
(20,293)
Depreciation and impairment of tangible fixed assets
1,012,651
828,722
Movements in working capital:
Decrease in stocks
136,821
50,280
Decrease in debtors
225,858
91,922
Increase/(decrease) in creditors
502,294
(886,489)
Cash generated from operations
3,042,273
2,022,402
26
Analysis of changes in net funds
1 September 2023
Cash flows
New finance leases
31 August 2024
£
£
£
£
Cash at bank and in hand
3,421,594
1,477,862
-
4,899,456
Obligations under finance leases
(660,914)
258,165
(255,191)
(657,940)
2,760,680
1,736,027
(255,191)
4,241,516
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