Company registration number 01285475 (England and Wales)
W.J. WATKINS & SON LIMITED
ANNUAL REPORT AND FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 OCTOBER 2024
W.J. WATKINS & SON LIMITED
COMPANY INFORMATION
Director
Mr D J Watkins
Secretary
Mr D J Watkins
Company number
01285475
Registered office
Highfield House
Holsworthy Beacon
Holsworthy
Devon
EX22 7NF
Auditor
Simpkins Edwards Audit LLP
The Summit
Woodwater Park
Pynes Hill
Exeter
EX2 5WS
Business address
Highfield House
Holsworthy Beacon
Holsworthy
Devon
EX22 7NF
W.J. WATKINS & SON LIMITED
CONTENTS
Page
Strategic report
1 - 2
Director's report
3
Director's responsibilities statement
4
Independent auditor's report
5 - 7
Profit and loss account
8
Group balance sheet
9
Group statement of changes in equity
10
Company balance sheet
11
Company statement of changes in equity
12
Group statement of cash flows
13
Notes to the financial statements
14 - 33
W.J. WATKINS & SON LIMITED
STRATEGIC REPORT
FOR THE YEAR ENDED 31 OCTOBER 2024
- 1 -
The director presents the strategic report for the year ended 31 October 2024.
Fair review of the business
The principal activities of the group during the year continued to be mixed farming (primarily focussed on pigs) and property construction.
Key financial performance indicators:-
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NB: Impairment of property work in progress reflected in the gross profit / (loss) | | |
Gross profit margin before impairment | | |
Profit / (loss) after taxation | | |
Earnings before interest, tax, depreciation and amortisation (EBITDA) | | |
Earnings before interest, tax, depreciation and amortisation (EBITDA) and impairment of property work in progress | | |
The group result for the year is largely reflective of challenges faced by the two property development companies and a provision of £1.07m created for future losses on the sale of properties. The issue is described in detail in the notes to the financial statements and the provision primarily reflects delays in the sale of completed properties, attributed to general economic factors. This has resulted in significantly higher development loan facilities than was projected and hence in the interest cost of the developments in progress. Other costs have also increased beyond expectation, with labour shortages pushing up prices and materials costs being impacted by general inflationary factors.
The trading performance of the farming business was similar to the previous year, with 2024 seeing some stability in pig sale prices and input costs. Nevertheless, the debt structure of the group and, hence, the interest cost in these financial statements, is a reminder of the challenges faced in recent years, with significant losses incurred in the periods immediately following the Covid-19 pandemic and the Russian invasion of Ukraine. Those events coincided with a period of capital investment, which led to further requirements for borrowing.
The adjusted EBITDA figures (before impairment) presented above are considered to provide a clearer picture of the trading performance of the group, excluding the impact of exceptional costs and high levels of interest.
Future Developments
In June 2025, the parent company sold its pig business and associated assets, realising a profit of approximately £2.4m based on consideration received compared to the book value of the assets concerned. This disposal has enabled a reduction in borrowings and other creditors and greatly simplified the group’s activities.
The company is continuing farming activities in the production of arable crops and is leasing certain agricultural properties to the new owner of the pig business. Therefore, the company remains a going concern and has a continuing revenue stream which is far less susceptible to general market factors than has been the case with the pig business in recent years.
W.J. WATKINS & SON LIMITED
STRATEGIC REPORT (CONTINUED)
FOR THE YEAR ENDED 31 OCTOBER 2024
- 2 -
Principal Risks and Uncertainties
Following the group’s exit from the pig industry and simplification of activities, exposure to fluctuating prices in the agricultural sector is greatly reduced.
The repayment of debt achieved from the pig business sale proceeds has greatly reduced exposure to variations in borrowing costs.
There remain uncertainties around the property development trade in terms of sales and input prices and the time between the completion of properties and achieving sales.
Financial Instruments and Risk Management
The group maintains a wide variety of facilities, including bank overdrafts, bank loans, agricultural mortgages, trade creditors, trade debtors, hire purchase arrangements and loans from directors and connected parties as its principal financial instruments. The purpose of these financial instruments is to provide finance for the group's day to day operations and to fund asset purchases to support those activities, as necessary.
Liquidity risk on the overdraft facility is managed by balancing expenditure with available income streams. The overdraft incurs interest at floating rates. The liquidity risk associated with hire purchase arrangements and other loans from financial institutions is managed by ensuring that sufficient funds are available to meet interest and capital calls as they are made. These loans carry a mixture of fixed and variable rates of interest and in the case of some long term mortgages require no capital repayment through their life.
Trade debtors are predominantly major UK food processing companies who operate on contractual payment terms which present minimal bad debt risk. Trade creditors represent a wide range of enterprises used to service business operations. Settlement is achieved through the bank overdraft facility and managed by balancing receipts from trade debtors with payments to trade creditors.
Loans from a director and connected parties are repayable as cash flow permits.
Mr D J Watkins
Director
24 July 2025
W.J. WATKINS & SON LIMITED
DIRECTOR'S REPORT
FOR THE YEAR ENDED 31 OCTOBER 2024
- 3 -
The director presents his annual report and financial statements for the year ended 31 October 2024.
Principal activities
The principal activities of the group continue to be that of mixed farming (primarily focussed on pigs) and property construction.
Results and dividends
The results for the year are set out on page 8.
No ordinary dividends were paid. The director does not recommend payment of a further dividend.
Director
The director who held office during the year and up to the date of signature of the financial statements was as follows:
Mr D J Watkins
Mr A Russell
(Resigned 9 June 2025)
Market value of land and buildings
Freehold farms and the fixed equipment thereon are included in these financial statements at fair value in order to reflect their true worth to the business. Non-farm buildings have not been revalued. On the basis of internal valuations, the fair value of freehold property, excluding farms, is considered to exceed net book value.
Auditor
The auditor, Simpkins Edwards Audit LLP, is deemed to be reappointed under section 487(2) of the Companies Act 2006.
Statement of disclosure to auditor
So far as each person who was a director at the date of approving this report is aware, there is no relevant audit information of which the auditor of the company is unaware. Additionally, the directors individually have taken all the necessary steps that they ought to have taken as directors in order to make themselves aware of all relevant audit information and to establish that the auditor of the company is aware of that information.
On behalf of the board
Mr D J Watkins
Director
24 July 2025
W.J. WATKINS & SON LIMITED
DIRECTOR'S RESPONSIBILITIES STATEMENT
FOR THE YEAR ENDED 31 OCTOBER 2024
- 4 -
The director is responsible for preparing the Annual Report and the financial statements in accordance with applicable law and regulations.
Company law requires the director to prepare financial statements for each financial year. Under that law the director has 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 director must not approve the financial statements unless he is satisfied that they give a true and fair view of the state of affairs of the group and company, and of the profit or loss of the group for that period. In preparing these financial statements, the director is required to:
select suitable accounting policies and then apply them consistently;
make judgements and accounting estimates that are reasonable and prudent;
state whether applicable UK Accounting Standards have been followed, subject to any material departures disclosed and explained in the financial statements;
prepare the financial statements on the going concern basis unless it is inappropriate to presume that the group and company will continue in business.
The director is responsible for keeping adequate accounting records that are sufficient to show and explain the group’s and company’s transactions and disclose with reasonable accuracy at any time the financial position of the group and company and enable them to ensure that the financial statements comply with the Companies Act 2006. He is also responsible for safeguarding the assets of the group and company and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.
W.J. WATKINS & SON LIMITED
INDEPENDENT AUDITOR'S REPORT
TO THE MEMBERS OF W.J. WATKINS & SON LIMITED
- 5 -
Opinion
We have audited the financial statements of W.J. Watkins & Son Limited (the 'parent company') and its subsidiaries (the 'group') for the year ended 31 October 2024 which comprise the group profit and loss account, the group balance sheet, the company balance sheet, the group statement of changes in equity, the company statement of changes in equity, the group statement of cash flows and notes to the financial statements, including a summary of significant accounting policies. The financial reporting framework that has been applied in their preparation is applicable law and United Kingdom Accounting Standards, including FRS 102 The Financial Reporting Standard applicable in the UK and Republic of Ireland (United Kingdom Generally Accepted Accounting Practice).
In our opinion the financial statements:
give a true and fair view of the state of the group's and the parent company's affairs as at 31 October 2024 and of the group's loss for the year then ended;
have been properly prepared in accordance with United Kingdom Generally Accepted Accounting Practice; and
have been prepared in accordance with the requirements of the Companies Act 2006.
We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and applicable law. Our responsibilities under those standards are further described in the Auditor's responsibilities for the audit of the financial statements section of our report. We are independent of the 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 director's 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 director 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 director is 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 director's report for the financial year for which the financial statements are prepared is consistent with the financial statements; and
The strategic report and the director's report have been prepared in accordance with applicable legal requirements.
W.J. WATKINS & SON LIMITED
INDEPENDENT AUDITOR'S REPORT (CONTINUED)
TO THE MEMBERS OF W.J. WATKINS & SON LIMITED
- 6 -
Matters on which we are required to report by exception
In the light of the knowledge and understanding of the group and the parent company and their environment obtained in the course of the audit, we have not identified material misstatements in the strategic report or the director's report.
We have nothing to report in respect of the following matters in relation to which the Companies Act 2006 requires us to report to you if, in our opinion:
adequate accounting records have not been kept by the parent company, or returns adequate for our audit have not been received from branches not visited by us; or
the parent company financial statements are not in agreement with the accounting records and returns; or
certain disclosures of directors' remuneration specified by law are not made; or
we have not received all the information and explanations we require for our audit.
Responsibilities of director
As explained more fully in the director's responsibilities statement, the director is 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 director determines 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 director is 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 director either intends to liquidate the parent company or to cease operations, or has no realistic alternative but to do so.
Auditor's responsibilities for the audit of the financial statements
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor's report that includes our opinion. Reasonable assurance is a high level of assurance but is not a guarantee that an audit conducted in accordance with ISAs (UK) will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements.
Irregularities, including fraud, are instances of non-compliance with laws and regulations. We design procedures in line with our responsibilities, outlined above, to detect material misstatements in respect of irregularities, including fraud. In so doing, we considered the following:-
The nature of the company, its control environment and performance indicators;
Results of our enquiries of management and directors regarding their own identification and assessment of the risks of irregularities; and
the matters discussed among the audit engagement team regarding how and where irregularities might occur in the financial statements and any potential indicators of fraud.
As a result of these procedures, we considered the opportunities and incentives that may exist within the group for fraud and identified the greatest potential for fraud in relation to stock valuation and the recognition of revenue. In common with all audits under ISAs (UK), we are also required to perform specific procedures to respond to the risk of management override.
W.J. WATKINS & SON LIMITED
INDEPENDENT AUDITOR'S REPORT (CONTINUED)
TO THE MEMBERS OF W.J. WATKINS & SON LIMITED
- 7 -
We also obtained an understanding of the legal and regulatory framework that the group operates in, focusing on provisions of those laws and regulations that had a direct effect on the determination of material amounts and disclosures in the financial statements. The key laws and regulations we considered in this context relate to Animal Welfare, Health and Safety and the UK Companies Act.
Our procedures in response to the risks identified included the following:
reviewing the financial statement disclosures and testing to supporting documentation;
understanding and evaluating the design and implementation of management controls;
performing analytical procedures to identify any unusual or unexpected relationships that may indicate risks of material misstatement due to fraud;
challenging assumptions and judgements made by management in their significant accounting estimates, in particular, in relation to stock valuation and income recognition;
review of Animal Welfare compliance reports and Health and Safety assessments, legal and professional costs and correspondence with insurers; and
in addressing the risk of fraud through management override of controls, testing the appropriateness of journal entries and other adjustments; assessing whether the judgements made in making accounting estimates are indicative of a potential bias; and evaluating the business rationale of any significant transactions that are unusual or outside the normal course of business.
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.
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.
Jonathan Williams BSc FCA CTA (Senior Statutory Auditor)
For and on behalf of Simpkins Edwards Audit LLP, Statutory Auditor
Chartered Accountants
The Summit
Woodwater Park
Pynes Hill
Exeter
EX2 5WS
24 July 2025
W.J. WATKINS & SON LIMITED
GROUP PROFIT AND LOSS ACCOUNT
FOR THE YEAR ENDED 31 OCTOBER 2024
- 8 -
2024
2023
Notes
£
£
Turnover
3
15,438,666
16,235,942
Cost of sales
(13,575,650)
(13,426,353)
Gross profit
1,863,016
2,809,589
Distribution costs
(535,062)
(564,655)
Administrative expenses
(2,453,261)
(1,825,217)
Other operating income
174,020
95,053
Operating (loss)/profit
6
(951,287)
514,770
Interest receivable and similar income
9
2,912
508
Interest payable and similar expenses
10
(839,096)
(709,242)
Loss before taxation
(1,787,471)
(193,964)
Taxation
11
269,720
447,176
(Loss)/profit for the financial year
(1,517,751)
253,212
The profit and loss account has been prepared on the basis that all operations are continuing operations.
W.J. WATKINS & SON LIMITED
GROUP BALANCE SHEET
AS AT 31 OCTOBER 2024
31 October 2024
- 9 -
2024
2023
Notes
£
£
£
£
Fixed assets
Tangible assets
12
7,075,808
7,337,090
Biological assets
13
805,286
747,454
7,881,094
8,084,544
Current assets
Stocks
16
7,159,066
7,827,299
Debtors
17
929,120
1,544,336
Cash at bank and in hand
1,491
1,290
8,089,677
9,372,925
Creditors: amounts falling due within one year
18
(12,522,414)
(12,294,874)
Net current liabilities
(4,432,737)
(2,921,949)
Total assets less current liabilities
3,448,357
5,162,595
Creditors: amounts falling due after more than one year
19
(2,161,150)
(2,357,637)
Net assets
1,287,207
2,804,958
Capital and reserves
Called up share capital
23
842,900
842,900
Share premium account
257,400
257,400
Revaluation reserve
2,597,608
2,597,608
Profit and loss reserves
(2,410,701)
(892,950)
Total equity
1,287,207
2,804,958
The financial statements were approved by the board of directors and authorised for issue on 24 July 2025 and are signed on its behalf by:
24 July 2025
Mr D J Watkins
Director
W.J. WATKINS & SON LIMITED
GROUP STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 OCTOBER 2024
- 10 -
Share capital
Share premium account
Revaluation reserve
Profit and loss reserves
Total
£
£
£
£
£
Balance at 1 November 2022
842,900
257,400
2,597,608
(1,146,162)
2,551,746
Year ended 31 October 2023:
Profit and total comprehensive income
-
-
-
253,212
253,212
Balance at 31 October 2023
842,900
257,400
2,597,608
(892,950)
2,804,958
Year ended 31 October 2024:
Loss and total comprehensive income
-
-
-
(1,517,751)
(1,517,751)
Balance at 31 October 2024
842,900
257,400
2,597,608
(2,410,701)
1,287,207
W.J. WATKINS & SON LIMITED
COMPANY BALANCE SHEET
AS AT 31 OCTOBER 2024
31 October 2024
- 11 -
2024
2023
Notes
£
£
£
£
Fixed assets
Tangible assets
12
6,959,311
7,190,739
Biological assets
13
805,286
747,454
Investments
14
2,000
2,000
7,766,597
7,940,193
Current assets
Stocks
16
3,339,853
3,924,112
Debtors
17
1,205,809
1,370,403
Cash at bank and in hand
222
11
4,545,884
5,294,526
Creditors: amounts falling due within one year
18
(8,865,201)
(8,109,593)
Net current liabilities
(4,319,317)
(2,815,067)
Total assets less current liabilities
3,447,280
5,125,126
Creditors: amounts falling due after more than one year
19
(2,150,278)
(2,318,787)
Net assets
1,297,002
2,806,339
Capital and reserves
Called up share capital
23
842,900
842,900
Share premium account
257,400
257,400
Revaluation reserve
2,597,608
2,597,608
Profit and loss reserves
(2,400,906)
(891,569)
Total equity
1,297,002
2,806,339
The financial statements were approved by the board of directors and authorised for issue on 24 July 2025 and are signed on its behalf by:
24 July 2025
Mr D J Watkins
Director
Company Registration No. 01285475
W.J. WATKINS & SON LIMITED
COMPANY STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 OCTOBER 2024
- 12 -
Share capital
Share premium account
Revaluation reserve
Profit and loss reserves
Total
£
£
£
£
£
Balance at 1 November 2022
842,900
257,400
2,597,608
(1,408,235)
2,289,673
Year ended 31 October 2023:
Profit and total comprehensive income for the year
-
-
-
516,666
516,666
Balance at 31 October 2023
842,900
257,400
2,597,608
(891,569)
2,806,339
Year ended 31 October 2024:
Profit and total comprehensive income
-
-
-
(1,509,337)
(1,509,337)
Balance at 31 October 2024
842,900
257,400
2,597,608
(2,400,906)
1,297,002
W.J. WATKINS & SON LIMITED
GROUP STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED 31 OCTOBER 2024
- 13 -
2024
2023
Notes
£
£
£
£
Cash flows from operating activities
Cash generated from operations
28
204,363
2,379,806
Interest paid
(839,096)
(709,242)
Income taxes refunded
815,166
131,647
Net cash inflow from operating activities
180,433
1,802,211
Investing activities
Purchase of tangible fixed assets
(287,435)
(162,737)
Proceeds on disposal of tangible fixed assets
136,716
308,378
Interest received
2,912
508
Net cash (used in)/generated from investing activities
(147,807)
146,149
Financing activities
Proceeds from borrowings
1,434,600
1,210,000
Repayment of borrowings
(772,597)
(1,384,886)
Repayment of bank loans
(204,493)
(293,157)
Payment of finance leases obligations
(529,208)
(535,513)
Net cash used in financing activities
(71,698)
(1,003,556)
Net (decrease)/increase in cash and cash equivalents
(39,072)
944,804
Cash and cash equivalents at beginning of year
(1,617,679)
(2,562,483)
Cash and cash equivalents at end of year
(1,656,751)
(1,617,679)
Relating to:
Cash at bank and in hand
1,491
1,290
Bank overdrafts included in creditors payable within one year
(1,658,242)
(1,618,969)
W.J. WATKINS & SON LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 OCTOBER 2024
- 14 -
1
Accounting policies
Company information
W.J. Watkins & Son Limited (“the company”) is a private limited company domiciled and incorporated in England and Wales. The registered office is Highfield House, Holsworthy Beacon, Holsworthy, Devon, EX22 7NF.
The group consists of W.J. Watkins & Son Limited and all of its subsidiaries.
1.1
Accounting convention
These financial statements have been prepared in accordance with FRS 102 “The Financial Reporting Standard applicable in the UK and Republic of Ireland” (“FRS 102”) and the requirements of the Companies Act 2006.
The financial statements are prepared in sterling, which is the functional currency of the company. Monetary amounts in these financial statements are rounded to the nearest £.
The financial statements have been prepared under the historical cost convention, modified to include the revaluation of freehold properties. In certain notes the directors have departed from the format prescribed in the Companies Act since, in their opinion the headings contained in the accounts provide a better understanding of the activities involved, which are primarily related to the farming trade. The principal accounting policies adopted are set out below.
The company is a qualifying entity for the purposes of FRS 102, being a member of a group where the parent of that group prepares publicly available consolidated financial statements, including this company, which are intended to give a true and fair view of the assets, liabilities, financial position and profit or loss of the group. The company has therefore taken advantage of exemptions from the following disclosure requirements for parent company information presented within the consolidated financial statements:
Section 4 ‘Statement of Financial Position’ – Reconciliation of the opening and closing number of shares;
Section 7 ‘Statement of Cash Flows’ – Presentation of a statement of cash flow and related notes and disclosures;
Section 11 ‘Basic Financial Instruments’ and Section 12 ‘Other Financial Instrument Issues’ – Carrying amounts, interest income/expense and net gains/losses for each category of financial instrument; basis of determining fair values; details of collateral, loan defaults or breaches, details of hedges, hedging fair value changes recognised in profit or loss and in other comprehensive income.
As permitted by s408 Companies Act 2006, the company has not presented its own profit and loss account and related notes. The company’s loss for the year was £1,509,337 (2023 - £516,666 profit).
1.2
Basis of consolidation
In the parent company financial statements, the cost of a business combination is the fair value at the acquisition date of the assets given, equity instruments issued and liabilities incurred or assumed, plus costs directly attributable to the business combination. The excess of the cost of a business combination over the fair value of the identifiable assets, liabilities and contingent liabilities acquired is recognised as goodwill.
W.J. WATKINS & SON LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 OCTOBER 2024
1
Accounting policies
(Continued)
- 15 -
The consolidated financial statements incorporate those of W.J. Watkins & Son Limited and all of its subsidiaries (ie entities that the group controls through its power to govern the financial and operating policies so as to obtain economic benefits).
All financial statements are made up to 31 October 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.
1.3
Going concern
The group suffered a substantial loss for the year, primarily as a result of impairment adjustments to the carrying value of property development work in progress. In the period since the balance sheet, the parent company has sold its pig business and associated assets for consideration totaling approximately £2.4m in excess of the book value of the assets concerned. This has enabled the reduction in group debt and greatly improved liquidity.
The parent company is continuing to trade in the growing of crops and is letting certain agricultural properties to the new owner of the pig business.
The group has a number of completed or nearly completed properties ready for sale and the proceeds will help to further reduce group borrowings.
On the basis of the current financial position of the company and group and projections of future performance, the director considers that the company and group are a going concern and these financial statements have been prepared on that basis.
1.4
Turnover
Turnover represents amounts receivable for the sale of pigs, animal feeds, residential properties, construction projects and minor works net of VAT and trade discounts.
Farming income is recognised at the point of despatch of goods.
Income from the sale of properties is recognised at the point in time when an unconditional contract is signed by the purchaser.
Profit is recognised on contracts, if the final outcome can be assessed with reasonable certainty, by including in the profit and loss account turnover and related costs as contract activity progresses. Turnover is calculated as that proportion of total contract value which costs to date bear to total expected costs for that contract.
Income from minor works is invoiced on completion.
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.
W.J. WATKINS & SON LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 OCTOBER 2024
1
Accounting policies
(Continued)
- 16 -
Depreciation is provided at rates calculated to write off the cost or valuation less estimated residual value of each asset over its expected useful life. Freehold farm properties (comprising land, buildings and fixed plant and machinery) are included at fair value. Depreciation charged is based on the brought forward book value. The following depreciation policies are used:
Land and buildings Freehold
Land: 0% per annum
Farm buildings: 5 - 10% per annum on cost
Other buildings: 2% per annum on cost
Land and buildings Leasehold
Over the terms of the leases
Plant and machinery
Plant: 5 - 20% per annum on cost
Tractors 10 - 20% per annum on cost
Motor vehicles
20% per annum on cost
The gain or loss arising on the disposal of an asset is determined as the difference between the sale proceeds and the carrying value of the asset, and is recognised in the profit and loss account.
1.6
Fixed asset investments
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.
1.7
Stocks
Raw materials are valued at the lower of cost and net realisable value.
Manufactured feedstuffs, crops in ground and harvested crops are valued at the lower of cost (including attributable production overheads) and net realisable value.
Bacon pig stocks are valued at the lower of accumulated cost (including attributable overheads) and net realisable value.
Work in progress is the accumulated cost of unsold plots. At the point of sale of a property, the relevant accumulated costs are transferred to cost of sales.
The group operates a policy of capitalising within work in progress interest and charges incurred on loans taken specifically for the purpose of funding the development of properties.
1.8
Taxation
The tax expense represents the sum of the tax currently payable and deferred tax.
Current tax
The tax currently payable is based on taxable profit for the year. Taxable profit differs from net profit as reported in the profit and loss account because it excludes items of income or expense that are taxable or deductible in other years and it further excludes items that are never taxable or deductible. The group’s liability for current tax is calculated using tax rates that have been enacted or substantively enacted by the reporting end date.
W.J. WATKINS & SON LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 OCTOBER 2024
1
Accounting policies
(Continued)
- 17 -
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.
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.
1.9
Employee benefits
The costs of short-term employee benefits are recognised as a liability and an expense, unless those costs are required to be recognised as part of the cost of stock or fixed assets.
1.10
Retirement benefits
Payments to defined contribution retirement benefit schemes are charged as an expense as they fall due.
1.11
Leases
Leases are classified as finance leases whenever the terms of the lease transfer substantially all the risks and rewards of ownership to the lessees. All other leases are classified as operating leases.
Assets held under finance leases are recognised as assets at the lower of the assets fair value at the date of inception and the present value of the minimum lease payments. The related liability is included in the balance sheet as a finance lease obligation. Lease payments are treated as consisting of capital and interest elements. The interest is charged to profit or loss so as to produce a constant periodic rate of interest on the remaining balance of the liability.
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.
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.
1.12
Rent receivable
The group lets or sub-lets certain freehold and leasehold buildings to third parties. Rentals receivable under operating leases are recognised on a straight line basis over the lease term.
1.13
Breeding sows are mature animals kept for the sale of their produce. They are valued at accumulated cost (including attributable overheads) with reductions reflected following each farrowing. The ultimate valuation is the expected cull proceeds.
W.J. WATKINS & SON LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 OCTOBER 2024
- 18 -
2
Judgements and key sources of estimation uncertainty
In the application of the group’s accounting policies, the director is required to make judgements, estimates and assumptions about the carrying amount of assets and liabilities that are not readily apparent from other sources. The estimates and associated assumptions are based on historical experience and other factors that are considered to be relevant. Actual results may differ from these estimates.
The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised where the revision affects only that period, or in the period of the revision and future periods where the revision affects both current and future periods.
Critical judgements
The following judgements (apart from those involving estimates) have had the most significant effect on amounts recognised in the financial statements.
Valuation of freehold farm
In preparing the financial statements, the directors made judgements regarding the fair value of the freehold farm. The amount included in the financial statements was deemed to be fair value, based on the opinion of the chartered surveyors' valuation.
Net realisble value and impairment of property work in progress
The directors exercise judgement in projecting the costs to completion and sales values of properties under construction and consequently in adjustments for the impairment of work in progress when it is anticipated that total development costs will exceed total sales values. An adjustment for impairment is made to work in progress to write down the value to a level that, allowing for projected future costs and sales values, will produce an overall break even result for the development in question. Each property development is assessed for impairment on an individual basis and projected profits on one project are not used to offset projected losses on another.
In assessing impairment of work in progress, the directors are required to estimate future costs and the timing and value of future sales. Factors beyond the directors’ control can impact upon the actual outcome compared to the original estimates. Changes to the price and availability of materials and labour can be driven by general market forces. Rising interest rates and the cost of living might impact upon demand for completed properties and the timing of sales. In estimating expected sales values, the directors take appropriate advice from property agents. However, general economic factors can result in variances from expectation. Delays to the timing of completed property sales mean that costs will increase, in particular, in relation to development loan interest.
In assessing work in progress for impairment, the directors have used the best information available to them as at the date of approving the financial statements. However, there remains the possibility that factors beyond their control may result in material divergence of actual results from projections.
Carrying value of pig stock and breeding herd
The directors exercise judgment in the accumulation of costs and the projection of net realisable value of the breeding herd and stocks of pigs reared for sale.
W.J. WATKINS & SON LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 OCTOBER 2024
- 19 -
3
Turnover and other revenue
An analysis of the group's turnover is as follows:
2024
2023
£
£
Turnover
Farming income
14,631,498
15,112,331
Property income
807,168
1,123,611
15,438,666
16,235,942
Other significant revenue
Interest income
2,912
508
Rent receivable
57,593
29,889
Sundry income
116,427
65,164
The total turnover of the group for the period has been derived from its principal activity wholly undertaken in the United Kingdom.
W.J. WATKINS & SON LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 OCTOBER 2024
- 20 -
4
Exceptional item
Group - Provision for loss on property development
Sales of completed properties by the group during the year and the period since year end were lower than projected, with the housing market impacted by increases in interest rates and costs of living and works on sites delayed by labour shortages. The building industry has seen significant inflation in the costs of materials and labour in recent years which has impacted on the cost of completed properties for sale and those nearing completion. The extended time taken to complete and sell certain properties has resulted in development loan facilities exceeding projection. In the light of these adverse trading conditions, the carrying value of development work in progress was reviewed again as at the end of the year and a further provision of £1,070,000 has been introduced for projected losses on the sale of completed properties. This followed a detailed review in the previous year which resulted in the creation of a provision of £350,000 for the year ended 31 October 2023. The accumulated property development provisions at the balance sheet date total £1,985,000 (2023: £915,000). The provision includes the projected future costs associated with development loan facilities which would have been substantially reduced if the timing of property sales had been in line with expectations.
Parent company – Intercompany loan release
The parent company, W.J. Watkins and Son Limited, has, in part, funded the working capital requirements of its subsidiary companies and also offered security in relation to third party development loans. In recognition of the impairment adjustment within the subsidiary companies and the net liabilities position that would have resulted, the parent company has absorbed the loss by releasing £992,000 of its intercompany loan to its subsidiaries, being the amount considered to be irrecoverable.
5
Auditor's remuneration
2024
2023
Fees payable to the company's auditor and associates:
£
£
For audit services
Audit of the financial statements of the group and company
26,250
26,910
Audit of the financial statements of the company's subsidiaries
13,834
14,674
40,084
41,584
For other services
All other non-audit services
30,085
15,700
6
Operating (loss)/profit
2024
2023
£
£
Operating (loss)/profit for the year is stated after charging/(crediting):
Depreciation of owned tangible fixed assets
689,580
638,718
Depreciation of tangible fixed assets held under finance leases
210,855
257,276
Loss/(profit) on disposal of tangible fixed assets
(17,972)
(30,212)
Cost of stocks recognised as an expense
10,207,588
10,462,842
Operating lease charges
79,153
76,752
W.J. WATKINS & SON LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 OCTOBER 2024
- 21 -
7
Director's remuneration
2024
2023
£
£
Remuneration for qualifying services
71,007
67,123
The number of directors for whom retirement benefits are accruing under defined contribution schemes amounted to 1 (2023 - 1).
8
Employees
The average monthly number of persons (including directors) employed by the group during the year was:
2024
2023
Number
Number
Production and sales
29
34
Office and management
19
18
48
52
Their aggregate remuneration comprised:
2024
2023
£
£
Wages and salaries
1,934,081
1,691,114
Social security costs
158,213
163,201
Pension costs
39,049
32,230
2,131,343
1,886,545
9
Interest receivable and similar income
2024
2023
£
£
Interest income
Other interest income
2,912
508
W.J. WATKINS & SON LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 OCTOBER 2024
- 22 -
10
Interest payable and similar expenses
2024
2023
£
£
Interest on financial liabilities measured at amortised cost:
Interest on bank overdrafts and loans
534,834
355,034
Other interest on financial liabilities
34,317
35,003
569,151
390,037
Other finance costs:
Interest on finance leases and hire purchase contracts
54,829
46,647
Other interest
215,116
272,558
Total finance costs
839,096
709,242
W.J. WATKINS & SON LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 OCTOBER 2024
- 23 -
11
Taxation
2024
2023
£
£
Adjustments in respect of prior periods
(269,720)
(447,176)
The actual credit for the year can be reconciled to the expected credit for the year based on the profit or loss and the standard rate of tax as follows:
2024
2023
£
£
Loss before taxation
(1,787,471)
(193,964)
Expected tax charge based on the standard rate of corporation tax in the UK of 25.00% (2023: 25.00%)
(446,868)
(48,491)
Tax effect of expenses that are not deductible in determining taxable profit
51,438
52,040
Tax effect of utilisation of tax losses not previously recognised
(80,250)
Change in unrecognised deferred tax assets
354,144
37,184
Depreciation on assets not qualifying for tax allowances
41,286
39,517
Prior year adjustment relating to Research and Development
(269,720)
(447,176)
Tax expense for the year
(269,720)
(447,176)
The group has trading losses of approximately £7,121,000 (2023: £6,028,000) available for carry forward against future trading profits.
The company's potential deferred tax asset of £746,200 (calculated at the main company tax rate of 25%) arising from the losses carried forward and timing differences between the treatment of certain items for accounting and tax purposes, has not been recognised.
The revaluation of the group's freehold farm has not given rise to a potential deferred tax liability as the application of indexation allowance would eliminate any profit on disposal of that property for corporation tax purposes.
W.J. WATKINS & SON LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 OCTOBER 2024
- 24 -
12
Tangible fixed assets
Group
Land and buildings Freehold
Land and buildings Leasehold
Plant and machinery
Motor vehicles
Total
£
£
£
£
£
Cost or valuation
At 1 November 2023
3,027,150
7,030,242
7,782,613
1,043,782
18,883,787
Additions
102,808
457,077
198,012
757,897
Disposals
(201,100)
(113,900)
(315,000)
At 31 October 2024
3,027,150
7,133,050
8,038,590
1,127,894
19,326,684
Depreciation and impairment
At 1 November 2023
533,037
5,323,459
4,937,658
752,543
11,546,697
Depreciation charged in the year
77,376
132,670
564,927
125,462
900,435
Eliminated in respect of disposals
(98,356)
(97,900)
(196,256)
At 31 October 2024
610,413
5,456,129
5,404,229
780,105
12,250,876
Carrying amount
At 31 October 2024
2,416,737
1,676,921
2,634,361
347,789
7,075,808
At 31 October 2023
2,494,113
1,706,783
2,844,955
291,239
7,337,090
Company
Land and buildings Freehold
Land and buildings Leasehold
Plant and machinery
Motor vehicles
Total
£
£
£
£
£
Cost or valuation
At 1 November 2023
3,027,150
7,030,242
7,421,658
825,535
18,304,585
Additions
102,808
453,632
198,012
754,452
Disposals
(149,100)
(113,900)
(263,000)
At 31 October 2024
3,027,150
7,133,050
7,726,190
909,647
18,796,037
Depreciation and impairment
At 1 November 2023
533,037
5,323,459
4,678,700
578,650
11,113,846
Depreciation charged in the year
77,376
132,670
546,631
110,459
867,136
Eliminated in respect of disposals
(46,356)
(97,900)
(144,256)
At 31 October 2024
610,413
5,456,129
5,178,975
591,209
11,836,726
Carrying amount
At 31 October 2024
2,416,737
1,676,921
2,547,215
318,438
6,959,311
At 31 October 2023
2,494,113
1,706,783
2,742,958
246,885
7,190,739
W.J. WATKINS & SON LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 OCTOBER 2024
12
Tangible fixed assets
(Continued)
- 25 -
The net carrying value of tangible fixed assets includes the following in respect of assets held under finance leases or hire purchase contracts.
Group
Company
2024
2023
2024
2023
£
£
£
£
Plant and machinery
972,908
1,804,593
913,375
1,737,460
Motor vehicles
311,621
199,764
285,454
160,542
1,284,529
2,004,357
1,198,829
1,898,002
Depreciation charge for the year in respect of leased assets
210,855
257,276
194,992
246,525
The group's freehold farm, including fixed plant and machinery was valued at an open market value of £2,715,000 by Carter Jonas LLP. The valuation was carried out on 30 March 2022.
If revalued assets were stated on an historical cost basis rather than a fair value basis, the total amounts
included would have been as follows:
Group
Company
2024
2023
2024
2023
£
£
£
£
Cost
1,866,156
1,866,156
1,866,156
1,866,156
Accumulated depreciation
1,668,033
1,629,716
1,668,033
1,629,716
Carrying value
198,123
236,440
198,123
236,440
The cost/valuation of non-depreciable land included within freehold land and buildings is £1,701,635 (2023: £1,701,635).
The cost/valuation and accumulated depreciation of land and buildings (leasehold and freehold) let to third parties under operating leases is as follows:-
Cost/valuation - £292,500 (2023: £292,500)
Accumulated depreciation - £nil (2023: £nil)
W.J. WATKINS & SON LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 OCTOBER 2024
- 26 -
13
Biological assets - company and group
Herd of
breeding sows
2024
£
Fair value
At 1 November 2022
747,454
Movement
57,832
At 31 October 2024
805,286
14
Fixed asset investments
Group
Company
2024
2023
2024
2023
Notes
£
£
£
£
Investments in subsidiaries
15
2,000
2,000
Fixed asset investments not carried at market value
In the opinion of the directors, the aggregate value of the company's investment in subsidiary undertakings is not less than the amount included in the balance sheet.
Movements in fixed asset investments
Company
Shares in subsidiaries
£
Cost or valuation
At 1 November 2023 and 31 October 2024
2,000
Carrying amount
At 31 October 2024
2,000
At 31 October 2023
2,000
15
Subsidiaries
Details of the company's subsidiaries at 31 October 2024 are as follows:
Name of undertaking
Registered office
Class of
% Held
shares held
Direct
Indirect
Highfield Homes of Distinction Limited
Highfield House, Holsworthy Beacon, Holsworthy, Devon
Ordinary
100
0
Highfield Penscombe Limited
Highfield House, Holsworthy Beacon, Holsworthy, Devon
Ordinary
0
100
The investments in subsidiaries are all stated at cost.
W.J. WATKINS & SON LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 OCTOBER 2024
15
Subsidiaries
(Continued)
- 27 -
Highfield Penscombe Limited is a 100% owned subsidiary of Highfield Homes of Distinction Limited.
16
Stocks
Group
Company
2024
2023
2024
2023
£
£
£
£
Raw materials and consumables
171,076
355,947
171,076
355,947
Work in progress
3,819,213
3,903,187
-
-
Livestock
3,168,777
3,568,165
3,168,777
3,568,165
7,159,066
7,827,299
3,339,853
3,924,112
Work in progress includes bank interest and charges totalling £409,724 (2023: £484,870) in connection with the building development loans.
17
Debtors
Group
Company
2024
2023
2024
2023
Amounts falling due within one year:
£
£
£
£
Trade debtors
571,356
557,182
571,356
550,896
Corporation tax recoverable
545,446
545,446
Amounts owed by group undertakings
-
-
459,278
-
Other debtors
232,291
270,726
72,834
126,219
Prepayments and accrued income
125,473
170,982
102,341
147,842
929,120
1,544,336
1,205,809
1,370,403
18
Creditors: amounts falling due within one year
Group
Company
2024
2023
2024
2023
Notes
£
£
£
£
Bank loans and overdrafts
21
1,792,134
1,827,301
1,781,443
1,817,097
Obligations under finance leases
20
381,201
373,513
363,103
338,827
Other borrowings
21
3,654,827
2,992,824
Trade creditors
2,423,494
3,088,083
2,317,673
2,938,123
Amounts owed to group undertakings
76,575
631,974
Other taxation and social security
45,668
46,160
31,704
31,320
Other creditors
3,659,977
3,409,417
3,655,389
1,674,839
Accruals and deferred income
565,113
557,576
639,314
677,413
12,522,414
12,294,874
8,865,201
8,109,593
W.J. WATKINS & SON LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 OCTOBER 2024
- 28 -
19
Creditors: amounts falling due after more than one year
Group
Company
2024
2023
2024
2023
Notes
£
£
£
£
Bank loans and overdrafts
21
1,806,270
1,936,323
1,800,495
1,920,665
Obligations under finance leases
20
354,880
421,314
349,783
398,122
2,161,150
2,357,637
2,150,278
2,318,787
20
Finance lease obligations
Group
Company
2024
2023
2024
2023
£
£
£
£
Future minimum lease payments due under finance leases:
Within one year
418,369
410,798
400,115
375,618
In two to five years
370,017
450,455
364,920
426,140
788,386
861,253
765,035
801,758
Less: future finance charges
(52,305)
(66,426)
(52,149)
(64,809)
736,081
794,827
712,886
736,949
Finance lease payments represent rentals payable by the company or group for certain items of plant and machinery. Leases include purchase options at the end of the lease period, and no restrictions are placed on the use of the assets. The average lease term is 3 years. All leases are on a fixed repayment basis and no arrangements have been entered into for contingent rental payments.
W.J. WATKINS & SON LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 OCTOBER 2024
- 29 -
21
Loans and overdrafts
Group
Company
2024
2023
2024
2023
£
£
£
£
Bank loans
1,940,162
2,144,655
1,923,696
2,118,793
Bank overdrafts
1,658,242
1,618,969
1,658,242
1,618,969
Other loans
3,654,827
2,992,824
7,253,231
6,756,448
3,581,938
3,737,762
Payable within one year
5,446,961
4,820,125
1,781,443
1,817,097
Payable after one year
1,806,270
1,936,323
1,800,495
1,920,665
Amounts included above which fall due after five years:
Payable by instalments
29,495
122,337
29,495
122,337
Payable other than by instalments
1,265,000
1,265,000
1,265,000
1,265,000
1,294,495
1,387,337
1,294,495
1,387,337
The bank overdraft and short term loans are secured by first legal charges over certain of the group's freehold properties and property work in progress, by a debenture and a personal guarantee by Mr David J Watkins.
The long-term bank loans are secured by fixed charges over certain freehold properties owned by the group and Mr David J Watkins.
Group
Company
2024
2023
2024
2023
Analysis of loans
£
£
£
£
Not wholly repayable within five years by instalments:
AMC mortgage repayable by instalments. Interest rate - 1.25% above base
29,495
122,337
29,495
122,337
Not wholly repayable within five years other than by instalments:
AMC mortgage repayable 31 July 2031. Interest rate - 6.93% above base
265,000
265,000
265,000
265,000
AMC mortgage repayable 25 September 2031. Interest rate - 6.93% above base
500,000
500,000
500,000
500,000
AMC mortgage repayable 16 December 2031. Interest rate - 1% above base
500,000
500,000
500,000
500,000
1,294,495
1,387,337
1,294,495
1,387,337
W.J. WATKINS & SON LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 OCTOBER 2024
- 30 -
22
Retirement benefit schemes
2024
2023
Defined contribution schemes
£
£
Charge to profit or loss in respect of defined contribution schemes
39,049
32,230
A defined contribution pension scheme is operated for all qualifying employees. The assets of the scheme are held separately from those of the group in an independently administered fund.
23
Share capital
Group and company
2024
2023
Ordinary share capital
£
£
Issued and fully paid
Ordinary 'A' shares of £1 each
20
400,000
Ordinary 'B' shares of £1 each
842,880
442,900
842,900
842,900
The ordinary 'A' shares entitle the holders to attend and vote at general meetings of the company but not to participate in profits by way of dividend or distribution of surpluses in a winding up when they would be repaid at par. The ordinary 'B' shares confer no voting rights but carry all rights to participate in the profits of the company.
During the year the company reclassified its existing 400,000 ordinary A Shares of £1 each and 442,900 ordinary B shares of £1 into 20 Ordinary A shares of £1 each and 842,880 Ordinary B Shares of £1 each.
24
Operating lease commitments
Lessee
Operating lease payments represent rentals payable by the company for certain of its properties. Leases are negotiated for a period between 3 and 20 years and rentals are fixed for an average of 4 years until a rent review is undertaken.
At the reporting end date the group had outstanding commitments for future minimum lease payments under non-cancellable operating leases, which fall due as follows:
Group
Company
2024
2023
2024
2023
£
£
£
£
Within one year
3,500
5,444
3,500
5,444
Between two and five years
11,667
14,000
11,667
14,000
In over five years
-
1,167
-
1,167
15,167
20,611
15,167
20,611
W.J. WATKINS & SON LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 OCTOBER 2024
- 31 -
25
Events after the reporting date
In June 2025, the parent company sold its pig business and associated assets, realising a profit of approximately £2.4m based on consideration received compared to the book value of the assets concerned.
26
Related party transactions
Transactions with related parties
Group
During the year the group undertook the following transactions with related parties:-
Mr David J Watkins (director / shareholder)
Mr Watkins has given a personal guarantee on the company's short term bank borrowing.
Certain of the group's bank borrowings are secured on assets owned personally by Mr Watkins.
During the year the group purchased land from Mr Watkins at a market value of £695,000.
The balance owed to Mr Watkins at the year end was £2,701,260 (2023: £2,221,795).
Mrs H C W Cobbledick (family member of Mr David J Watkins)
During the year Mrs Cobbledick has continued to provide the group with a loan. The loan is repayable on demand with an interest rate of 4% per annum. At the balance sheet date the group owed Mrs Cobbledick £734,108 (2023: £959,989).
Mr A Russell (director)
At the balance sheet date Mr A Russell owed the group £10,134 (2023: £10,621) on which interest is accrued.
D J Watkins Farming Enterprise (sole trade business of which Mr David J Watkins is proprietor)
Sales and recharges to that business totalled £150,970 (2023: £131,331).
Purchases and recharges from that business totalled £199,863 (2023: £150,000).
The net balance owed to that business at the year end was £Nil (2023: 168,532).
Trusts of Which Mr David J Watkins is Trustee
At the year end the group owed a total of £550,652 (2023: £516,341) to various trusts of which Mr David J Watkins is a trustee. Interest is payable at a rate of 3% above Bank of England base rate. Interest charged by that Trust in the year totalled £34,311 (2023: £30,689).
David Watkins Self Invested Pension Plan (the SIPP)
Four of the farms operated by the group are rented from the SIPP under 10 year leases and two under 3 year leases. The rent payable for the period totalled £79,153 (2023: £76,752).
The net balance owed to the SIPP at the year end was £450,356 (2023: £571,176).
Tre, Pol & Pen Limited (company wholly owned by Mr David J Watkins)
Sales to that business in the year totalled £22,563 (2023: £48,944).
Purchases and recharges from that business totalled £170,000 (2023: £nil).
The net balance owed to that company at the year end was £62,573 (2023: Owed by that company £97,330).
W.J. WATKINS & SON LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 OCTOBER 2024
26
Related party transactions
(Continued)
- 32 -
Company
During the year the company undertook the following transactions with related parties:-
Mr David J Watkins (director / shareholder)
Mr Watkins has given a personal guarantee on the company's short term bank borrowing.
Certain of the company's long term bank borrowings are secured on assets owned personally by Mr Watkins.
The balance due to Mr Watkins at the year end was £2,701,260 (2023: £658,395).
Mrs H C W Cobbledick (family member of Mr David J Watkins)
During the year Mrs Cobbledick has continued to provide the company with a loan. The loan is repayable on demand with an interest rate of 4% per annum. At the balance sheet date the company owed Mrs Cobbledick £734,108 (2023: £959,989).
Mr A Russell (Director)
At the balance sheet date Mr A Russell owed the company £10,134 (2023: £10,621) on which interest is accrued.
D J Watkins Farming Enterprise (sole trade business of which Mr David J Watkins is proprietor)
Sales and recharges to that business totalled £87,008 (2023: £125,809).
Purchases and recharges from that business totalled £199,863 (2023: £150,000).
The net balance owed by that business at the year end was £nil (2023: £nil).
David Watkins Self Invested Pension Plan (the SIPP)
Four of the farms operated by the company are rented from the SIPP under 10 year leases and two under 3 year leases. The rent payable for the year totalled £79,153 (2023: £76,752).
The net balance owed to the SIPP at the year end was £450,356 (2023: £571,176).
Tre, Pol & Pen Limited (Company owned by Mr David J Watkins)
Sales and recharges to that business totalled £20,697 (2023: £20,670).
Purchases and recharges from that business totalled £170,000 (2023: £nil).
The net balance owed to that company at the year end was £204,298 (2023: £42,168).
27
Controlling party
The ultimate controlling party is Mr David J Watkins by virtue of his shareholding.
W.J. WATKINS & SON LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 OCTOBER 2024
- 33 -
28
Cash generated from group operations
2024
2023
£
£
(Loss)/profit for the year after tax
(1,517,751)
253,212
Adjustments for:
Taxation credited
(269,720)
(447,176)
Finance costs
839,096
709,242
Investment income
(2,912)
(508)
Gain on disposal of tangible fixed assets
(17,972)
(30,212)
Depreciation and impairment of tangible fixed assets
900,435
895,994
Movements in working capital:
Decrease in stocks
668,233
419,798
Decrease in debtors
84,666
88,930
(Decrease)/increase in creditors
(421,880)
625,874
(Increase)/decrease in value of breeding sows
(57,832)
(135,348)
Cash generated from operations
204,363
2,379,806
29
Analysis of changes in net debt - group
1 November 2023
Cash flows
New finance leases
31 October 2024
£
£
£
£
Cash at bank and in hand
1,290
201
-
1,491
Bank overdrafts
(1,618,969)
(39,273)
-
(1,658,242)
(1,617,679)
(39,072)
-
(1,656,751)
Borrowings excluding overdrafts
(5,137,479)
(457,510)
-
(5,594,989)
Obligations under finance leases
(794,827)
529,208
(470,462)
(736,081)
(7,549,985)
32,626
(470,462)
(7,987,821)
30
Analysis of changes in net debt - company
1 November 2023
Cash flows
New finance leases
31 October 2024
£
£
£
£
Cash at bank and in hand
11
211
-
222
Bank overdrafts
(1,618,969)
(39,273)
-
(1,658,242)
(1,618,958)
(39,062)
-
(1,658,020)
Borrowings excluding overdrafts
(2,118,793)
195,097
-
(1,923,696)
Obligations under finance leases
(736,949)
494,525
(470,462)
(712,886)
(4,474,700)
650,560
(470,462)
(4,294,602)
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