The directors present the strategic report for the year ended 30 September 2024.
The Company's principal activity is that of a holding company. Its subsidiaries are engaged in landscape and forestry contracting, property management, farming, retail and tourism.
The directors are of the strong belief that the group will continue to deliver profitability into the future despite challenging economic circumstances.
The directors have assessed the main risks facing the group as being availability of and inflationary pressures on materials, food purchases and labour. With respect to Lowther Forestry Group Limited (LFG) the judicious purchasing of materials and where necessary a forward buying strategy has been adopted. Across the group labour shortages are easing although the directors consider the necessity to pay competitively and incentivize performance important to retain staff.
Other risks that the directors review and assess include:
Financial
With inflation now easing the direct purchase of materials has less impact on the group’s profitability. More concerning is the impact of the current economic fluctuations and in the case of Lowther Castle the disposable income of its visitors.
To mitigate loss of custom price increases have been minimal and the focus has been on delivering good service and a great product across the group.
With respect to LFG, due diligence on new and existing customers and careful monitoring of debtors continues. As such there is minimal bad and doubtful debt.
Energy and the war in Ukraine
The Group is exposed to energy related risk in that there are buildings including offices, a dairy and multiple vehicles and items of equipment to service and run. Other than minimising usage little can be done, however LCL has been fortunate to have had a lower tariff plan in place during the worst of the energy crisis and it has sought to fuel its biomass boiler with LFG generated chippings to minimize costs.
The directors are not aware of any sanctions relating to the war impacting any key suppliers or customers.
Covid-19
There has been no lasting material impact to the workforce and no changes to business operations following the removal of government support.
On the basis of the above, the Board considers the group operation to be a going concern.
At the year end the group had shareholder funds of £14,854,655 (2023: £14,078,457) including retained profits of £7,270,009 (2023: £6,493,811).The directors therefore consider the Group’s position to be strong with current assets of £8,972,661 (2023: £10,173,774) exceeding current liabilities of £2,879,077 (2023: £3,260,078). The cash position remains healthy at £1,589,119 (2023: £2,734,936).
Based on these results the directors continue to believe that each subsidiary now has an established base to take full advantage of growth opportunities and to maximise the profitability of the group.
Financial Key Performance Indicators monitored by the Board:
2024 2023
Turnover £15,126,283 £16,451,718
Gross profit £4,964,326 £6,070,294
Profit before tax £1,529,979 £2,510,410
Trade debtors £2,391,016 £2,540,674
Debtor days 58 56
Lowther Park Farms Ltd
In July 2023 it was decided to expand the partnership namely Lowther Farming Partnership and transfer the remaining trading business of the farm to the partnership. All of the assets, liabilities, cash, employees and contracts transferred to the Partnership. This resulted in the farm holding a partnership share of 6.25% and its ultimate owner Lowther Estate Trust, the second partner holding 93.75%.
Within the Partnership the operation of the farm continues much as it has in previous years with the farm plan of rewilding continuing successfully during the past year with further environmental schemes including woodland planting and pasture creation ongoing and in the pipeline.
The dairy partnership is well established and selling milk profitably to Arla.
Lowther Forestry Group Limited
The company has a strong order book for the coming year with a diverse client base, a high level of client retention and repeat work being key factors to the continued growth of the business. The long term strategy of organic growth continues underpinned by a strong management team country wide focused on tender preparation and contract awards.
The company has a strong cash position and remains open to the potential acquisition of a business that would benefit the future growth and stability of the company. The directors have identified that to achieve its long term aims and to strengthen the existing business, the recruitment of new employees to key positions will be crucial to achieve the aims of the shareholders.
The directors continue to ensure that quality standards are maintained across the company as evidenced by successful audits and the achievement and retention of qualifications including those in the ISO sphere.
Lowther Castle limited (LCL)
Following a period of closure due to Covid, the company enjoyed remarkable success with ticket sales continuing to grow and visitor numbers of circa 125,000 in 2022/ 23 and 2023/24.
The strategy is to continue the garden restoration project with enhanced interpretation and horticultural information plus talks and tours to further enhance the visitor experience. New menus have been introduced in the cafe with seasonal and local produce including that grown in the gardens included in many dishes. The renowned play area has been extended and embellished with new slides and an attractive new toddler area. Further enhancements to the cafe including a 'continental' style outdoor covered seating area with takeaway facilities are planned to increase the number of covers available and ease pressure on the main cafe.
Memberships and pre-purchasing marketing initiatives are ongoing.
The main risk is loss of key personnel and lack of staff during peak season trading. The directors have increased pay and marketed seasonal roles to local schools and colleges including transport resulting in a considerable reduction in vacancies.
The Company has a comfortable cash reserve and overheads are under tight control. On this basis the directors are optimistic that the company will meet its profit target this year and with the enhancements listed above believe that 2024/25 trading will also be successful.
Lowther Estates Limited (LEL)
The company has continued to concentrate on achieving planning permission for its stock of properties prior to their sale. This process has been protracted due to the introduction of stringent planning conditions but of !ate this is easing and applications are again being considered.
A number of properties have now been sold with the proceeds available to repay loan notes to Lowther Group Limited. A pipeline of sales is lined up for 2025/26 and beyond.
Lowther Group Ltd (LGL)
Lowther Group Limited has and will continue to repay the loan to its ultimate parent Lowther Estate Trust.
On behalf of the board
The directors present their annual report and financial statements for the year ended 30 September 2024.
The results for the year are set out on page 11.
Ordinary dividends were paid amounting to £222,836. The directors do not recommend payment of a further dividend.
The directors who held office during the year and up to the date of signature of the financial statements were as follows:
The group manages its cash and borrowing requirements in order to maximise interest income and minimise interest expense, whilst ensuring the group has sufficient liquid resources to meet the operating needs of the business.
The group is exposed to fair value interest rate risk on its fixed rate borrowings and cash flow interest rate risk on floating rate deposits, bank overdrafts and loans. The group uses interest rate derivatives to manage the mix of fixed and variable rate debt so as to reduce its exposure to changes in interest rates.
Investments of cash surpluses, borrowings and derivative instruments are made through banks and companies which must fulfil credit rating criteria approved by the Board.
All customers who wish to trade on credit terms are subject to credit verification procedures. Trade debtors are monitored on an ongoing basis and provision is made for doubtful debts where necessary.
The auditor Saffery LLP is deemed to be reappointed under section 487(2) of the Companies Act 2006.
We have audited the financial statements of Lowther Group Limited (the 'parent company') and its subsidiaries (the 'group') for the year ended 30 September 2024 which comprise the group profit and loss account, the group statement of comprehensive income, 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).
Basis for opinion
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 group and parent 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 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.
Other information
The directors are responsible for the other information. The other information comprises the information included in the annual report other than the financial statements and our auditor's report thereon. 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 the 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.
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 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 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.
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 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 parent company or to cease operations, or have no realistic alternative but to do so.
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor's report that includes our opinion. Reasonable assurance is a high level of assurance but is not a guarantee that an audit conducted in accordance with ISAs (UK) will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements.
Irregularities, including fraud, are instances of non-compliance with laws and regulations. We design procedures in line with our responsibilities, outlined above, to detect material misstatements in respect of irregularities, including fraud. The specific procedures for this engagement and the extent to which these are capable of detecting irregularities, including fraud are detailed below.
Identifying and assessing risks related to irregularities:
We assessed the susceptibility of the group and parent company’s financial statements to material misstatement and how fraud might occur, including through discussions with the directors, discussions within our audit team planning meeting, updating our record of internal controls and ensuring these controls operated as intended. We evaluated possible incentives and opportunities for fraudulent manipulation of the financial statements. We identified laws and regulations that are of significance in the context of the group and parent company by discussions with directors and by updating our understanding of the sector in which the group and parent company operates.
Laws and regulations of direct significance in the context of the group and parent company include The Companies Act 2006 and UK Tax legislation.
Audit response to risks identified
We considered the extent of compliance with these laws and regulations as part of our audit procedures on the related financial statement items including a review of group and parent company financial statement disclosures. We reviewed the parent company's records of breaches of laws and regulations, minutes of meetings and correspondence with relevant authorities to identify potential material misstatements arising. We discussed the parent company's policies and procedures for compliance with laws and regulations with members of management responsible for compliance.
During the planning meeting with the audit team, the engagement partner drew attention to the key areas which might involve non-compliance with laws and regulations or fraud. We enquired of management whether they were aware of any instances of non-compliance with laws and regulations or knowledge of any actual, suspected or alleged fraud. We addressed the risk of fraud through management override of controls by testing the appropriateness of journal entries and identifying any significant transactions that were unusual or outside the normal course of business. We assessed whether judgements made in making accounting estimates gave rise to a possible indication of management bias. At the completion stage of the audit, the engagement partner’s review included ensuring that the team had approached their work with appropriate professional scepticism and thus the capacity to identify non-compliance with laws and regulations and fraud.
As group auditors, our assessment of matters relating to non-compliance with laws or regulations and fraud differed at group and component level according to their particular circumstances. Our communications included a request to identify instances of non-compliance with laws and regulations and fraud that could give rise to a material misstatement of the group financial statements in addition to our risk assessment.
There are inherent limitations in the audit procedures described above and the further removed non-compliance with laws and regulations is from the events and transactions reflected in the financial statements, the less likely we would become aware of it. Also, the risk of not detecting a material misstatement due to fraud is higher than the risk of not detecting one resulting from error, as fraud may involve deliberate concealment by, for example, forgery or intentional misrepresentations, or through collusion.
A further description of our responsibilities is available on the Financial Reporting Council’s website at: https://www.frc.org.uk/auditorsresponsibilities. This description forms part of our auditor's report.
Use of our report
This report is made solely to the parent 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 parent company's members those matters we are required to state to them in an auditors 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 parent company and the parent company's members as a body, for our audit work, for this report, or for the opinions we have formed.
As permitted by s408 Companies Act 2006, the company has not presented its own profit and loss account and related notes. The company’s profit for the year was £587,790 (2023 - £1,075,210 profit).
These financial statements have been prepared in accordance with the provisions relating to medium-sized companies.
Lowther Group Limited (“the company”) is a private company limited by shares incorporated in England and Wales. The registered office is Lowther Castle, Lowther, Penrith, Cumbria, CA10 2HH.
The group consists of Lowther Group Limited and all of its subsidiaries.
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 £1.
The financial statements have been prepared under the historical cost convention. The principal accounting policies adopted are set out below.
The consolidated group financial statements consist of the financial statements of the parent company Lowther Group Limited together with all entities controlled by the parent company (its subsidiaries).
All financial statements are made up to 30 September 2024. Where necessary, adjustments are made to the financial statements of subsidiaries to bring the accounting policies used into line with those used by other members of the group.
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.
In 2018 the company acquired 100% of the share capital of Lowther Castle Limited, Lowther Park Farm Limited and Lowther Forestry Group Limited in a direct share for share exchange. The transaction was not an acquisition of a business but a group restructure whereby the Trustees of Lowther Estate Trust maintain the same interest in the newly formed Lowther Group Limited. Therefore the financial statements of Lowther Group Limited represent a continuation of the activities and operations of the Group previously held by Lowther Estate Trust. Accordingly, merger accounting has been used to account for this transaction as it meets the criteria as per Companies Act 2006 and FRS102.
The Group continues to recognise a merger reserve which arose on a past business combination that was accounted for as a merger in accordance with UK GAAP as applied at that time.
Subsidiaries are consolidated in the group’s financial statements from the date that control commences until the date that control ceases.
At the time of approving the financial statements, the directors have a reasonable expectation that the group has adequate resources to continue in operational existence for the foreseeable future. At the balance sheet date, the group had net current assets of £6,093,584 and net assets of £14,854,655 following a profit for the year of £1,313,034. The directors have assessed the upcoming 12 months and are confident that there is sufficient headroom to pay all liabilities as they fall due. They have also received confirmation from the trustees of the Lowther Estate Trust, the ultimate controlling party, of their continuing support should this be required.
Thus the directors continue to adopt the going concern basis of accounting in preparing the financial statements.
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.
When cash inflows are deferred and represent a financing arrangement, the fair value of the consideration is the present value of the future receipts. The difference between the fair value of the consideration and the nominal amount received is recognised as interest income.
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 contracts for the provision of landscaping and other services is recognised by reference to the stage of completion when the stage of completion, costs incurred and costs to complete can be estimated reliably. The stage of completion is calculated by comparing costs incurred, mainly in relation to contractual hourly staff rates and materials, as a proportion of total costs. Where the outcome cannot be estimated reliably, revenue is recognised only to the extent of the expenses recognised that it is probable will be recovered.
Revenue from property sales is recognised when the significant risks and rewards of ownership have passed to the buyer, the Company retains neither continuing managerial involvement to the degree usually associated with ownership nor effective control of the property sold, 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.
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.
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.
Equity investments are measured at fair value through profit or loss, except for those equity investments that are not publicly traded and whose fair value cannot otherwise be measured reliably, which are recognised at cost less impairment until a reliable measure of fair value becomes available.
In the parent company financial statements, investments in subsidiaries, associates and jointly controlled entities are initially measured at cost and subsequently measured at cost less any accumulated impairment losses.
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.
At each reporting period end date, the group reviews the carrying amounts of its tangible assets to determine whether there is any indication that those assets have suffered an impairment loss. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment loss (if any). Where it is not possible to estimate the recoverable amount of an individual asset, the company estimates the recoverable amount of the cash-generating unit to which the asset belongs.
The carrying amount of the investments accounted for using the equity method is tested for impairment as a single asset. Any goodwill included in the carrying amount of the investment is not tested separately for impairment.
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.
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, which include debtors, 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, 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.
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.
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.
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.
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.
Financial liabilities are derecognised when the group's contractual obligations expire or are discharged or cancelled.
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.
The tax expense represents the sum of the tax currently payable and deferred 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.
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. Where items recognised in other comprehensive income or equity are chargeable to or deductible for tax purposes, the resulting current or deferred tax expense or income is presented in the same component of comprehensive income or equity as the transaction or other event that resulted in the tax expense or income. 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.
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.
Payments to defined contribution retirement benefit schemes are charged as an expense as they fall due.
The cost of providing benefits under defined benefit plans is determined separately for each plan using the projected unit credit method, and is based on actuarial advice.
The change in the net defined benefit liability arising from employee service during the year is recognised as an employee cost. The costs are recognised as an expense in measuring profit or loss in the period.
The net interest element is determined by multiplying the net defined benefit liability by the discount rate, taking into account any changes in the net defined benefit liability during the period as a result of contribution and benefit payments. The net interest is recognised in profit or loss as other finance revenue or cost.
Remeasurement changes comprise actuarial gains and losses, the effect of the asset ceiling and the return on the net defined benefit liability excluding amounts included in net interest. These are recognised immediately in other comprehensive income in the period in which they occur and are not reclassified to profit and loss in subsequent periods.
The net defined benefit pension asset or liability in the balance sheet comprises the total for each plan of the present value of the defined benefit obligation (using a discount rate based on high quality corporate bonds), less the fair value of plan assets out of which the obligations are to be settled directly. Fair value is based on market price information, and in the case of quoted securities is the published bid price. The value of a net pension benefit asset is limited to the amount that may be recovered either through reduced contributions or agreed refunds from the scheme.
Rentals payable under operating leases, including any lease incentives received, are charged to profit or loss on a straight line basis over the term of the relevant lease except where another more systematic basis is more representative of the time pattern in which economic benefits from the leased asset are consumed.
Rental income from operating leases is recognised on a straight line basis over the term of the relevant lease. Initial direct costs incurred in negotiating and arranging an operating lease are added to the carrying amount of the leased asset and recognised on a straight line basis over the lease term.
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.
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.
The estimates and assumptions which have a significant risk of causing a material adjustment to the carrying amount of assets and liabilities are as follows.
The company recognises income on a stage by completion basis. Amounts recoverable on long term contracts is calculated on an input basis where the margins are consistent through the project with revenue matching costs incurred at each stage. Judgement is used when estimating accounts recoverable on long term contracts and the completion of each stage.
The company enters into contracts for tree planting containing remediation commitments to replant within a certain period if the trees do not establish satisfactorily. Estimates are made by the directors based on historic experience of the economic outflows that may arise under these contracts.
The company makes an estimate of the recoverable value of trade and other debtors. The company uses estimates based on historical experience in determining the level of debts, which the company believes, will not be collected. These estimates include such factors as the credit rating of the debtor, the ageing profile of debtors and historical experience. Any significant change in the level of customers that default on payments or significant improvements that resulted in a change in the level of bad debt provision would have an impact on the operating results. The level of provision required is reviewed on an ongoing basis.
The present value of the defined benefit pension liability depends on a number of factors that are determined on an actuarial basis using a number of assumptions, including discount rates. Any changes in these assumptions will impact on the carrying value of the pension liability.
When the scheme is estimated to be in surplus, the recoverability of the asset is assessed with reference to future deficit contributions. If the actuarial advice is to continue to fund the pension scheme at the same or an increased level, then the directors do not deem the asset recoverable via reduced contributions and do not recognise this in the financial statements.
The average monthly number of persons (including directors) employed by the group and company during the year was:
Their aggregate remuneration comprised:
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:
In addition to the amount charged to the profit and loss account, the following amounts relating to tax have been recognised directly in other comprehensive income:
Details of the company's subsidiaries at 30 September 2024 are as follows:
Included in creditors due within one year is £50,000 (2023 - £50,000) relating to the Coronavirus Business Interruption Loan. The loan is secured by way of a fixed charge debenture over the assets of the Group.
Included in creditors due more than after one year is £nil (2023 - £45,834) relating to the Coronavirus Business Interruption Loan. The loan is secured by way of a fixed charge debenture over the assets of the Group.
The company enters into contracts for tree planting containing remediation commitments to replant within a certain period if the trees do not establish satisfactorily. Estimates are made based on historic experience of the economic outflows that may arise under these contracts.
The following are the major deferred tax liabilities and assets recognised by the group and company, and movements thereon:
The deferred tax liability set out above is expected to reverse within 12 months and relates mainly to accelerated capital allowances that are expected to mature within the same period.
A defined contribution pension scheme is operated for certain employees. The assets of the scheme are held separately from those of the group in an independently administered fund.
The company operates a defined benefit scheme.
Pension arrangements for the Company's directors and senior employees are managed by the 'Lakeland Investments Limited (1976) Retirement Fund'. Up to 1 June 2016 this fund was deemed a multi employer scheme under the provisions of Financial Reporting Standard 17 'Retirement Benefits'.
The individual company's pension obligations under the fund of defined benefits regulated by statute, with members making fixed percentage contributions of their remuneration. Employer contributions are set by the fund's consulting actuary at a sufficient level to cover the balance of the cost and are charged to the accounts annually.
The fund is subject to a triennial actuarial valuation. The last triennial actuarial valuation was as at 31 May 2021. At that date, there was a surplus in the funding of £860,000 on the Statutory Funding Objective (SFO) basis. This represented a funding level of 111%.
Following completion of the 2015 valuation, the Scheme actuary recommended monthly contributions amounting to £200,000 per annum, to be paid by the participating Employers from 1 June 2016 to 31 May 2021. During the period it was agreed by the employers within the group plan to split the shortfall in funding on a revised basis so that contributions are as follows:
Lowther Forestry Group Limited monthly contributions equivalent to £138,675 per annum
Lowther Park Farms Limited monthly contributions equivalent to £42,557 per annum
Lowther (1992) Estate Trust monthly contributions equivalent to £18,768 per annum
The split of total contributions between the participating Employers may differ to those set out above providing that the total combined contributions are no less that £200,000 per annum.
Due to the agreement to make contributions as above under the provisions of FRS 102 this constitutes a group pension plan.
The total contributions of £200,000 per annum comprise £100,000 in respect of the shortfall in funding calculated in accordance with the Recovery Plan dated 22 April 2016, £70,000 per annum in respect of assumed ongoing Scheme expenses and an allowance of £30,000 in respect of the assumed PPF levy.
The employers can make contributions in excess of those given above at any time.
Assumed life expectations on retirement at age 65:
As the directors do not deem the pension scheme asset of £185,000 (2022: £328,000) to be recoverable, the actual return on assets has been restricted by the movement on the unrecognised asset of £143,000 to bring the overall position of the pension scheme to £nil on the balance sheet.
The amounts included in the balance sheet arising from obligations in respect of defined benefit plans are as follows:
Amounts recognised in the profit and loss account
Amounts taken to other comprehensive income
Movements in the present value of defined benefit obligations
The defined benefit obligations arise from plans which are wholly or partly funded.
Movements in the fair value of plan assets
Fair value of plan assets at the reporting period end
Merger Reserve
This reserve is created on consolidation in line with merger accounting and records the adjustment required to eliminate all subsidiary investments in the group.
Profit and loss account
This reserve records retained earnings and accumulated losses.
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:
The group has taken advantage of FRS 102 section 33.1A exemption from disclosing transactions with group undertakings where 100% of the voting rights are held within the group.
During the year the group entered into several transactions with the Lowther Estates Trust, a trust in which a director is also a trustee. Sales totalling £9,565 and purchases totalling £222,836 were made between the group and Lowther Estate Trust. The net amount owed by the group to the trust was £8,684. The amounts are interest free, unsecured and repayable on demand.
The group leases Lowther Castle from Lowther Castle and Gardens Trust, an unincorporated entity under common control, for a peppercorn rent.
During the year sales totalling £1,130,377 and purchases totalling £591,751 were made between the group and Lowther Farming Partnership. At the year end £118,809 was owed by and £15,688 was owed to Lowther Farming Partnership.
Additionally, £60,500 was owed from Lowther Farming Partnerships in respect of a loan which was originally in place with Lowther Park Farms, previously a 100% group company, and has subsequently transferred to Lowther Farming Partnerships.
During the year purchases totalling £886 were made between the company and JN Lowther Holdings Limited. At the year end £49 was owed to JN Lowther Holdings Limited.