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Registered number:
FOR THE YEAR ENDED 30 SEPTEMBER 2024
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LAWTON CAPITAL LIMITED
COMPANY INFORMATION
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LAWTON CAPITAL LIMITED
CONTENTS
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LAWTON CAPITAL LIMITED
GROUP STRATEGIC REPORT
FOR THE YEAR ENDED 30 SEPTEMBER 2024
The directors present their strategic report, which is followed by the directors' report, together with the audited financial statements for the year ended 30 September 2024.
The principal activity of the company during the year was that of a holding company. The principal activity of the company's main trading subsidiary undertaking Lawton Yarns Limited is that of a spinner and manufacturer of woollen yarns. The company's principal risk relates to the performance of its subsidiary undertaking.
The group has continued to trade as a spinner and manufacturer of woollen yarns.
Throughout the year ended 30 September 2024, the group traded in the supply of woollen yarn to UK based residential carpet manufacturers. Changes in the ownership structure of the business and its operations are dealt with in the post balance sheet events paragraph below. The primary roles of the individual companies referred to as the Group were: P41 Limited – owner of the freehold property and landlord. LY Manufacturing Limited - manufacturer of yarn. Lawton Yarns Limited – sales and product development for woollen yarn customers on behalf of the Group (placed into administration in December 2024). In addition to the above, the group of companies included various dormant holding companies in which there were no assets or trading in the year. Trading conditions continued to be challenging as the key input costs of UK labour, as determined by the National Minimum Wage, and the uncompetitive nature of energy prices for domestic manufacturing businesses compared to non-UK competition persisted and indeed accelerated. From a demand perspective the deterioration of consumer confidence limited volume demand. The increases seen in interest rates and consumer price inflation contributed significantly to further uncertainty amongst consumers. Softening of demand and the threat of import penetration from lower cost competition removed the ability to recover all incremental costs through price increases increasing the pressure on margins throughout the industry. Despite these pressures, turnover remained stable at £27.7m (2023 - £32.7m) but margins suffered resulting in an operating loss reported of £489,539 (2023 - profit £571,231). The continued focus on customer service and preservation of trading volumes remains the strength of the business.
Post-balance sheet events
The persistent increases in uncontrollable input costs and certain overheads have been mitigated by the replacement of UK manufacturing capacity since December 2024 with imported volumes of yarn from strategic partners based in lower wage economies. The company has deployed significant senior resource and skills to work with the respective suppliers improving production efficiencies and product quality.
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LAWTON CAPITAL LIMITED
GROUP STRATEGIC REPORT (CONTINUED)
FOR THE YEAR ENDED 30 SEPTEMBER 2024
Only when the Directors are satisfied that the key criterion of timeliness and quality could be met has the decision to transfer volumes overseas been taken. This resulted in a redundancy program being run from late September until December 2024 which saw the direct UK workforce reduced to 105 staff from 200. The reduction in labour also reduced the group’s manufacturing capacity in the UK and limited UK purchases of raw material inputs.
Together these changes to the operational footprint of the group reduced the impact of the overall cost base to increases in National Minimum Wage, utility costs and global commodity price variations. These have in the main been replaced by agreed fixed prices with our supply partners for bought-in product developing an increased variable cost structure for the business. A total of 90 people were made redundant in November 2024 with the previous trading company Lawton Yarns Limited being placed into administration by the directors on 20 December 2024. The business and assets of Lawton Yarns Limited were acquired by the Lawton Yarns Group on 27 December 2024 and the main trading company of Lawton Yarns Manufacturing Limited replaced Lawton Yarns Limited. Ownership of the group has remained with the directors, Tim Kay, Peter Guy L’Amie and Carlton Siddle throughout. Trading now continues with a blend of products sourced from the supply partners and the UK based manufacturing unit providing quality products to the entire customer base.
Going concern
The directors believe that the above restructuring was essential to both avoiding imminent liquidity difficulties, medium term margin erosion as cost increases were not recoverable in the market and longer term issues should absent any certainty in the utility market. Futureproofing the business by securing additional flexibility and support will also facilitate reduction in borrowings over time as working capital assets are optimised to further enhance operational costs. Trading throughout the period was challenging and has remained so post year-end although order volumes have remained robust at current levels. Despite the headwinds facing the group, profitable trading built upon the robust support from a strong customer base remains the most significant asset. The business continues to forecast modest profits and has agreed covenants and facilities with its lenders for the next 12 months from the date of these financial statements. In light of the above the directors continue to apply the going concern principles for preparation of the group’s financial statements.
UK economic status and situation represents the largest risk to the business given the volatility in all major indicators that jeopardise confidence and thus the ability for the economy to commit to growth across all sectors.
The main risks are unchanged from previous years therefore being interest rates, inflation, liquidity, and credit risk. The directors review and agree policies for managing each of these risks and they are summarised below. Interest risk The group's interest rate exposure arises mainly from its interest-bearing borrowings. The group monitors the financial risk of interest rate movements on a regular basis and the impact rises would have on profitability. Mitigation of this risk area requires substantial reduction in borrowing levels alone.
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LAWTON CAPITAL LIMITED
GROUP STRATEGIC REPORT (CONTINUED)
FOR THE YEAR ENDED 30 SEPTEMBER 2024
Credit risk
All debtors are subject to credit verification procedures by the group. Debtors are reviewed on a regular basis and provision is made for doubtful debts when necessary. Historic issues relating to previous ownership groups and performance up to 2019 remain a key obstacle to securing supply side credit as the market will only consider providing any credit support should commitment be made by the business to repay historic debts suffered by credit insurers in full. Foreign exchange risk The group mitigates its exposure to exchange rate fluctuations by accepting invoices in Sterling only. The group naturally hedges against specific currency movements by dealing with suppliers in various territories and currencies. Liquidity risk Consequentially the group is subject to proforma credit positions which exacerbate cash flow pressures. The company manages its working capital requirement on a daily basis to ensure it has sufficient liquid resources to meet the operating needs of the business. The group continues to enjoy the support of its funders and shareholders.
As a batch processing business, management utilises a range of batch specific indicators to monitor production, efficiency and performance. For overall control the focus of management information lies in weekly and monthly figures for turnover, gross margin, production volumes and net margin. In addition improved visibility into customer order requirements in the period enables more comprehensive control over operations.
This report was approved by the board on 30 September 2025 and signed on its behalf.
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LAWTON CAPITAL LIMITED
DIRECTORS' REPORT
FOR THE YEAR ENDED 30 SEPTEMBER 2024
The directors present their report and the financial statements for the year ended 30 September 2024.
The directors are responsible for preparing the Group strategic report, the Directors' report and the consolidated financial statements in accordance with applicable law and regulations.
In preparing these financial statements, the directors are required to:
∙select suitable accounting policies for the Group's financial statements and then apply them consistently;
∙make judgments and accounting estimates that are reasonable and prudent;
∙prepare the financial statements on the going concern basis unless it is inappropriate to presume that the Group will continue in business.
The directors are responsible for keeping adequate accounting records that are sufficient to show and explain the Company's transactions and disclose with reasonable accuracy at any time the financial position of the Company and the Group and to enable them to ensure that the financial statements comply with the Companies Act 2006. They are also responsible for safeguarding the assets of the Company and the Group and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.
The loss for the year, after taxation and minority interests, amounted to £792,680 (2023 - profit 13,887).
The directors who served during the year were:
The directors understand the importance of our employees to the long term success of the business. All staff are managed by a line manager, their performance is measured by their line manager against pre-agreed KPIs and training and development needs are identified in the annual PDRs as well as through ongoing on the job training and external training as necessary.
Ongoing training and personal development are key strategies in our HR principles and the Group communicates to our employees through regular meetings and consultations. Two -way communication is encouraged throughout the group.
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LAWTON CAPITAL LIMITED
DIRECTORS' REPORT (CONTINUED)
FOR THE YEAR ENDED 30 SEPTEMBER 2024
The directors have chosen to disclose information on the following, required by the Companies Act 2006, to be included in the Director's Report, within the Strategic Report;
- information on financial risk management and policies; - information on suppliers, customers and other; and - information regarding future developments of the business, post balance sheet events and going concern.
The auditors, Sumer Auditco Limited, will be proposed for reapppointment in accordance with section 485 of the Companies Act 2006.
This report was approved by the board on
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LAWTON CAPITAL LIMITED
INDEPENDENT AUDITORS' REPORT TO THE MEMBERS OF LAWTON CAPITAL LIMITED
We have audited the financial statements of Lawton Capital Limited (the 'parent Company') and its subsidiaries (the 'Group') for the year ended 30 September 2024, which comprise the Consolidated profit and loss account, the Consolidated statement of comprehensive income, the Consolidated balance sheet, the Company balance sheet, the Consolidated statement of cash flows, the Consolidated statement of changes in equity, the Company statement of changes in equity and the related notes, 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 Financial Reporting Standard 102 ‘The Financial Reporting Standard applicable in the UK and Republic of Ireland' (United Kingdom Generally Accepted Accounting Practice).
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 Auditors' responsibilities for the audit of the financial statements section of our report. We are independent of the Group in accordance with the ethical requirements that are relevant to our audit of the financial statements in the United Kingdom, including the Financial Reporting Council'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.
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 or the parent Company's ability to continue as a going concern for a period of at least twelve months from when the financial statements are authorised for issue.
Our responsibilities and the responsibilities of the directors with respect to going concern are described in the relevant sections of this report.
The other information comprises the information included in the Annual Report other than the financial statements and our Auditors' report thereon. The directors are responsible for the other information contained within the Annual Report. Our opinion on the financial statements does not cover the other information and, except to the extent otherwise explicitly stated in our report, we do not express any form of assurance conclusion thereon.
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LAWTON CAPITAL LIMITED
INDEPENDENT AUDITORS' REPORT TO THE MEMBERS OF LAWTON CAPITAL LIMITED (CONTINUED)
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.
In our opinion, based on the work undertaken in the course of the audit:
∙the information given in the Group 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 Group 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 its environment obtained in the course of the audit, we have not identified material misstatements in the Group strategic report or the Directors' report.
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LAWTON CAPITAL LIMITED
INDEPENDENT AUDITORS' REPORT TO THE MEMBERS OF LAWTON CAPITAL LIMITED (CONTINUED)
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 Auditors' 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 Group financial statements.
Irregularities, including fraud, are instances of non-compliance with laws and regulations. We design procedures in line with our responsibilities, outlined above, to detect material misstatements in respect of irregularities, including fraud. The extent to which our procedures are capable of detecting irregularities, including fraud is detailed below:
In order to identify and assess the risks of material misstatements, including fraud and non-compliance with laws and regulations that could be expected to have a material impact on the financial statements, we have considered:
∙the results of our enquiries of management and those charged with governance of their assessment of the risks of fraud and irregularities;
∙the nature of the group, including its management structure and control systems, including the opportunity for management to override such controls;
∙management’s incentives and opportunities for fraudulent manipulation of the financial statements including the group’s remuneration and bonus policies and performance targets; and
∙the industry and environment in which it operates.
We also considered UK tax and pension legislation and laws and regulations relating to employment and the preparation and presentation of the financial statements such as the Companies Act 2006.
Based on this understanding we identified the following matters as being of significance to the entity:
∙laws and regulations considered to have a direct effect on the financial statements including UK financial reporting standards, Company Law and tax and pension legislation;
∙the timing of the recognition of commercial income;
∙compliance with legislation relating to health and safety;
∙management bias in selecting accounting policies and determining estimates;
∙inappropriate journal entries;
∙recoverability of debtors; and
∙the requirement to include provisions against stock and the amount of any such provision.
We communicated the outcomes of these discussions and enquiries, as well as consideration as to where and how fraud may occur in the entity, to all engagement team members.
Audit procedures undertaken in response to the potential risks relating to irregularities (which include fraud and non-compliance with laws and regulations) comprised:
∙enquiries of management and those charged with governance as to whether the entity complies with such laws and regulations;
∙enquiries with the same concerning any actual or potential litigation or claims;
∙discussion with the same regarding any known or suspected instances of non-compliance with laws and regulation and fraud;
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LAWTON CAPITAL LIMITED
INDEPENDENT AUDITORS' REPORT TO THE MEMBERS OF LAWTON CAPITAL LIMITED (CONTINUED)
∙inspection of relevant legal correspondence;
∙assessment of matters reported to management and the result of the subsequent investigation;
∙obtaining an understanding of the relevant controls and testing their operation during the period;
∙obtaining an understanding of the policies and controls over the recognition of income and testing their implementation during the year;
∙review documentation relating to compliance with the regulations including insurance;
∙challenging assumptions made by management in their specific accounting policies and estimates, in particular in relation to carrying value of stock.
∙identifying and testing journal entries, in particular any journal entries posted with unusual account combinations or crediting revenue or cash;
∙assessing the recovery of debtors in the period since the balance sheet date and challenging assumptions made by management regarding the recovery of balances which remain outstanding;
∙reviewing the financial statements for compliance with the relevant disclosure requirements;
∙performing analytical procedures to identify any unusual or unexpected relationships or unexpected movements in account balances which may be indicative of fraud;
∙reviewing correspondence with HMRC;
∙evaluating the underlying business reasons for any unusual transactions; and
∙considered the implementation of controls during the year.
No instances of material non-compliance were identified. However, the likelihood of detecting irregularities, including fraud, is limited by the inherent difficulty in detecting irregularities, the effectiveness of the entity’s controls, and the nature, timing and extent of the audit procedures performed. Irregularities that result from fraud might be inherently more difficult to detect than irregularities that result from error. As explained above, there is an unavoidable risk that material misstatements may not be detected, even though the audit has been planned and performed in accordance with ISAs (UK).
A further description of our responsibilities for the audit of the financial statements is located on the Financial Reporting Council's website at: www.frc.org.uk/auditorsresponsibilities. This description forms part of our Auditors' 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 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 Company and the Company's members, as a body, for our audit work, for this report, or for the opinions we have formed.
for and on behalf of
Statutory Auditors
14th Floor
33 Cavendish Square
W1G 0PW
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LAWTON CAPITAL LIMITED
REGISTERED NUMBER: 13887693
CONSOLIDATED BALANCE SHEET
AS AT 30 SEPTEMBER 2024
The financial statements were approved and authorised for issue by the board and were signed on its behalf on
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LAWTON CAPITAL LIMITED
REGISTERED NUMBER: 13887693
CONSOLIDATED BALANCE SHEET (CONTINUED)
AS AT 30 SEPTEMBER 2024
The notes on pages 18 to 37 form part of these financial statements.
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LAWTON CAPITAL LIMITED
REGISTERED NUMBER: 13887693
COMPANY BALANCE SHEET
AS AT 30 SEPTEMBER 2024
The Company has taken advantage of the exemption allowed under section 408 of the Companies Act 2006 and has not prepared its own Statement of Comprehensive Income in these financial statements. The loss after tax of the parent company was £1,935,849 (2023 - £18,338).
The financial statements were approved and authorised for issue by the board and were signed on its behalf on
The notes on pages 18 to 37 form part of these financial statements.
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