FOR THE 52 WEEKS ENDED 1 JANUARY 2023
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WEBBS GARDEN CENTRES LIMITED
COMPANY INFORMATION
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WEBBS GARDEN CENTRES LIMITED
CONTENTS
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WEBBS GARDEN CENTRES LIMITED
GROUP STRATEGIC REPORT
FOR THE 52 WEEKS ENDED 1 JANUARY 2023
The results for the year and financial position of the Company are as shown in the annexed financial statements. Total revenue for the year for the Group was £28.2m (2021: £26.0m) and the profit before taxation for the year, after adding back depreciation of Wychbold property, was £119k (2021: profit of £2,644k).
On the back of what was a record year in terms of profits and turnover in 2021, the economic environment has become extraordinarily unpredictable. Following a promising 2022 Spring season, with demand for plants, garden furniture and horticultural products remaining strong from their peak in 2021, inflation became embedded in the UK economy with the start of the Ukraine war and post Covid recovery issues. Add to that political turmoil in the UK all through last Summer and Autumn, UK consumer confidence turned to an all-time low as we moved into the key Christmas trading period with drops in disposable income. To combat inflation, interest rates have been rising significantly during 2023 to date, which has impacted more on consumer spending power, albeit does mean more cash in the pockets of those with savings. Inevitably our ability to generate profits as a business has become more challenging off the back of this environment. This was exacerbated in 2022 by a number of specific factors, such as the extraordinary hike in overseas freight rates peaking at $20,000 per container during the Summer. These extortionate shipping costs had to be absorbed by the business given the trading conditions faced in the last half of 2022 and is not something we expect to recur, with freight rates reversing to approximately $3,000 per container in 2023. We also incurred a number of one-off costs in 2022 in relation to achieving planning for our Solar Farm investment at our Wychbold site, which is being installed during 2023; significant acquisition costs in relation to the purchase of our 4th garden centre at Millets Farm near Abingdon, Oxfordshire in July 2022, including investing in our head office team to be able to better absorb the increase turnover and business; and significant costs and disruption relating to going live with new IT systems throughout the business during the year. The disruption and cost caused by these factors has been the primary reason for the overall small loss generated in 2022 and as a result we expect the business to return to profitability in 2023. The business continues to manage cost inflation, which has continued to soar in 2023 to date, largely as a result of energy and food cost increases. This, along with the continued significant increases in wages due to the annual National Living/Minimum Wage increases in April, has made the ongoing trading environment even tougher for most businesses. However, we have a history of managing in such tough times and protecting cash flows, we have a very strong Balance Sheet and Reserves position and will continue to manage both cash flows and overheads whilst maintaining our very strong relationship with our bank. We have all been working very hard through the end of last year and during 2023 to improve the above scenario. The Solar Farm at Wychbold has since July 2023 been generating power for the site. We await the installation of a large battery plant in November 2023 to properly generate enough own power to tackle high energy costs and a full year of savings to come in 2024. It has been a challenging weather year in 2023 to date and feels like we have only had the best part of 5 weeks good weather from Mid-May into June, so our stores have done extremely well to have maintained customer footfall through the year-to-date period. Plant sales have held up relatively well overall and our restaurants and food halls have remained busy and popular as we are still representing good value. Larger ticket items such as furniture and landscapes have not surprisingly struggled, although we have managed our stocks better this year to ensure less carry over into 2024. Our Events experiences continue to triumph, especially over the Christmas periods, as we find the appetite for experience and wow remains strong across our customers. We continue to invest in making our stores look great and be great experiences to visit, including the new pet department and play-area opening recently at our Millets Farm centre. These improvements have helped us achieve Garden Centre Association Awards at all 4 of our garden centres once again in 2023, including Best Destination Centre in the Midlands region at our Wychbold store. This can only help us drive future growth in a challenging sales environment and is testimony to the hard work and efforts of our teams. The Directors aim to ensure the Company continues to produce sustained growth within its principal activities. The Company will ensure it continues to source products and deliver services that are attractive to its marketplace in order to ensure its continued profitability. The cost base of the Company continues to be closely managed in order to maintain profitability.
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WEBBS GARDEN CENTRES LIMITED
GROUP STRATEGIC REPORT (CONTINUED)
FOR THE 52 WEEKS ENDED 1 JANUARY 2023
Webbs continues to have a strong Balance Sheet even after such turbulent trading conditions. Webbs has remained financially self-sufficient throughout the period and typically generates strong operating cash flows to support reinvestment into keeping our business relevant and entrepreneurial, whilst maintaining strong support from our funding partners.
As previously mentioned, we have continued to invest significantly in a number of capital projects in 2022 to ensure the ongoing long-term development of the business, its store estate and online platform. This includes upgrading our IT systems throughout the business in June 2022 and the acquisition of Millets Farm Garden Centre in July 2022. The net book value of tangible and intangible fixed assets has increased from £24.1m in 2021 to £28.5m in 2022. The expenditure on tangible and intangible fixed assets in 2022 was £5.1m (2021: £0.7m). This was funded through a combination of operating cash flows and bank funding, which explains the reduction in operating cash flow generation in 2022 versus the previous year. The directors have decided to maintain the value of Freehold Land and Buildings at their Wychbold premises as at 1 January 2023, on a Fair Value basis, following an increase of £3 million last year. PRINCIPAL RISKS AND UNCERTAINTIES The directors constantly monitor the risks and uncertainties facing the Company with particular reference to the exposure on exchange rates, liquidity, stocks, interest rates and credit risks. They are confident that there are suitable policies in place and there are no material risks and uncertainties which have not been considered. The Company uses various financial instruments which include loans, cash and various items, such as trade debtors and trade creditors that arise directly from its operations. The main purpose of these financial instruments is to raise finance for the Company’s operations. The existence of these financial instruments exposes the Company to a number of financial risks, which are described in more detail below. The main risks arising from the Company’s financial instruments are currency risk, interest rate risk, credit risk and liquidity risk. The directors review and agree policies for managing each of these risks and they are summarised below. Currency Risk The Company has exposure to translation and transaction foreign exchange risk through its supply chain. Transaction exposures are hedged, principally using forward currency contracts. Whilst the aim is to achieve an economic hedge the Company does not adopt an accounting policy of hedge accounting for these financial statements. Liquidity Risk The Company seeks to manage financial risk by ensuring sufficient liquidity is available to meet foreseeable needs and to invest cash assets safely and profitably. Short term flexibility is achieved by utilising related Company funds. Interest Rate Risk The Company finances its operations through a mixture of retained profits, related Company funds and borrowings. The Company has previously used base rate caps and swaps to manage its interest rate risk. Credit Risk The Company’s principal financial assets are stock. It does not have significant credit risk in relation to Trade Debtors due to the retail nature of the business. Its principal trade debtors relate to rental amounts due from tenants who occupy parts of the sites at all four of our stores, which carries minimal risk due to contractual lease agreements in place and good convenance of tenants through estate management.
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WEBBS GARDEN CENTRES LIMITED
GROUP STRATEGIC REPORT (CONTINUED)
FOR THE 52 WEEKS ENDED 1 JANUARY 2023
The directors monitor performance of the business using key performance indicators (KPI’s) both financial and non-financial. These are monitored at all levels of the business.
These include: Sales units and value – monitored continually by customer, supplier, category and model range. Turnover has increased by 8.5% to £28.2 million in 2022 from £26.0 million last year. Gross profit margin – raw material cost prices and currency rates are closely tracked. Gross profit margin percentage decreased from 47.5% in 2021 to 46.2% in 2022. This was the result of a combination of trading conditions in the last half of 2022 meaning the business had to absorb all of the extraordinary increases in freight and other supplier cost prices to customers, as well as increased promotional and clearance activity due to higher levels of end of season stock holdings. Wage to sales ratios – total wages as a percentage of sales increased from 24.7% in 2021 to 27.7% in 2022, driven by significant increase in the National Living Wage from April 2022, as well as no furlough support being received in 2022 compared to the previous year. Stock turn – as at 1 January 2023 stock was turning at 2.7 times per annum based on the previous 12 months cost of sales. This is a significant reduction from the previous year-end at 4.0 times per annum due to the higher levels of seasonal stock carry over (including Furniture and Christmas), albeit we reduced our orders for 2023 ranges to reflect this. Customer numbers and footfall are tracked at all of our stores. Cash flow targets – forecasts are established and reviewed weekly and monthly to ensure working capital is effectively managed. Staff retention and wellbeing – monitored to ensure employee welfare is at the forefront of the business. Customer service – levels of quality and performance are continually reviewed to maximise customer satisfaction.
The directors recognise that there are some serious environmental and local community challenges that come with running a business responsibly. Webbs is currently not a totally sustainable business but is taking many steps to get there. Ongoing practices such as recycling waste materials and controlling energy usage are now well established, with ongoing investment in LED lighting and more energy efficient heating equipment for our stores and offices. In addition to the Solar Panels we already have on our Wychbold store roof, we aim to become approximately 75% energy self-sufficient at our main Wychbold site from 2024 once our new, onsite Solar Farm becomes fully operational from November 2023 with further improvements to follow in 2024.
Water conservation remains of paramount importance, and we benefit from rainwater harvesting in the irrigation of our retail areas.
This report was approved by the board on 14 December 2023 and signed on its behalf.
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WEBBS GARDEN CENTRES LIMITED
DIRECTORS' REPORT
FOR THE 52 WEEKS ENDED 1 JANUARY 2023
The directors present their report and the financial statements for the 52 weeks ended 1 January 2023.
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.
Company law requires the directors to prepare financial statements for each financial year. Under that law the directors have elected to prepare the financial statements in accordance with applicable law and United Kingdom Accounting Standards (United Kingdom Generally Accepted Accounting Practice), including Financial Reporting Standard 102 ‘The Financial Reporting Standard applicable in the UK and Republic of Ireland'. Under company law the directors must not approve the financial statements unless they are satisfied that they give a true and fair view of the state of affairs of the Company and the Group and of the profit or loss of the Group for that period.
In preparing these financial statements, the directors are required to:
∙select suitable accounting policies for the Group's financial statements and then apply them consistently;
∙make judgments 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 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 directors are responsible for the maintenance and integrity of the corporate and financial information included on the Group's website. Legislation in the United Kingdom governing the preparation and dissemination of financial statements and other information included in Directors' reports may differ from legislation in other jurisdictions.
The loss for the 52 weeks, after taxation, amounted to £447,141 (2022: profit £1,634,836).
Dividends of £
The directors who served during the 52 weeks were:
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WEBBS GARDEN CENTRES LIMITED
DIRECTORS' REPORT (CONTINUED)
FOR THE 52 WEEKS ENDED 1 JANUARY 2023
The Directors always have the long-term health of the business at the forefront of their decision making, including reviews and assessments of 5-year plans to drive future growth. The majority shareholder of the business is one of the three Directors, so the long-term business strategy is paramount to the ongoing thoughts of the Directors.
The Directors recognise that the reputation of the business is hugely important with its colleagues, customers, and suppliers alike. The decisions the Directors make will always consider at least preserving the reputation of the business, given the strength of its brand reputation in the local regions surrounding its store portfolio. The Directors take a zero-tolerance approach to any illegal or other such actions which may harm the reputation of the business in any way. The Company’s strategy remains one of steady investment in the estate, maintaining and growing revenue and the profit base and reducing net debt despite ongoing challenges such as significant cost inflation, National Living/Minimum Wage rises and increasing Regulatory compliance requirements. Focus for 2023 is to invest and bed in both our new Millets Farm Garden Centre in its first full year, as well as our front and back-end EPOS, ERP & Hospitality systems throughout the Company to drive the productivity and reporting benefits we expect having invested in the development of these systems over the last few years. These improvements must ensure we maintain and improve our customer and colleague experiences both in store and online. We are also looking to invest in ways to become a more sustainable business, including the installation of our Solar Farm at Wychbold having finally achieved successful planning application at the start of 2023. ENGAGEMENT WITH EMPLOYEES Webbs Garden Centres Limited are committed to the development and improvement of all employees within the business. We believe that we can only improve as a whole if we continue to communicate regularly and receive feedback from all those involved in the business. Employees are kept well informed of the performance and objectives of the business through weekly meetings, monthly newsletters and bi-annual Director presentations and Chairman statements. Employees have continued to play a key role in shaping the development of the business including ranging decisions and store layout following our refit programmes in all our stores. Employees are fully appraised and consulted on any significant changes to company policy. Directors and senior management, whilst sited at our store in Wychbold, regularly discuss matters of concern and current interest with employees across all of our sites. We conduct an annual employee survey, through Great Places To Work, the findings of which help us shape our Company welfare and development strategy, as detailed below. We introduced a more formalised Career Paths Document in 2018 and also further developed colleague training and career development pathways in 2019, to ensure we are supporting the development of all of our employees, no matter what stage of their careers with us. This includes a Specialist Training Guarantee open to all permanent Webbs employees, to gain a recognised formal qualification in their specialist areas. This is being used in employee appraisals to help set objectives and improve motivation and drive performance at all levels. We have invested heavily in our HR team in 2022 to enable us to focus more time on developing this career pathway and training programme across the business to drive performance levels and buy-in from all colleagues. We also run a Future Leaders Programme for all Webbs employees who are not already at Supervisor level or above and who would like to develop their leadership skills for the future. The main focus in our capital spending in the last half of 2023 and into 2024 will be on building and installing a new HR and Time & Attendance system to ensure we can provide all our colleagues with the best and most efficient platform to communicate, learn and develop within our business. This will automate many current manual processes and also ensure rota costings are more accurate and consistently managed better as a business going forwards. This will also enable more time for our HR team to focus on improving our learning and development modules and save time in the administration of recruitment on onboarding of colleagues. Webbs Garden Centres Limited is an equal opportunities employer and actively recruits from all aspects of society. It is the company policy to promote an environment free from discrimination, harassment and victimisation, where everyone will receive equal rights regardless of gender, colour, ethnic origin, disability, age, marital status, sexual orientation or religion. All decisions relating to employment practices are based solely upon work criteria and individual merit.
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WEBBS GARDEN CENTRES LIMITED
DIRECTORS' REPORT (CONTINUED)
FOR THE 52 WEEKS ENDED 1 JANUARY 2023
Webbs Garden Centres Limited is a totally customer-focused business, all our decisions on strategy and future development are with our customers at the forefront of our thoughts. The majority of our customers are those who shop either at our stores or online via our website. Sales transactions with these retail customers are immediate, in that the customer pays for the goods they buy at the time of buying them. Our only debtors in relation to these retail customers relate to credit card or digital payment transactions which take approximately 2-3 days to clear in our bank account from the respective merchant providers. We only recognise these sales in our accounts once the stock has transferred ownership from us to the customer.
We very rarely undertake business to business transactions, although we do have a small number of wholesale customer accounts who pay within 30 days for the goods or services they receive. Our only other customers are our tenants, who lease areas of our property at each of our stores for the purposes of their own retail trading activity. Our tenants pay us rental and service charges over the respective agreed contractual lease terms and these are invoiced and paid either monthly or quarterly depending on the tenant agreement in place. Webbs Garden Centres Limited ensures it maintains very strong relationships with all of its suppliers, whether they relate to the supply of retail items for sale in our stores, or services and non-stock items and consumables. Our standard payment terms of agreement with our suppliers are End Of Month 60 days (“EOM60”) from date of invoice, although we have a variety of payment terms agreed and in place across our suppliers depending on the nature of the stock or service involved. We make weekly supplier payment runs and pay our invoices on a timely basis unless we are awaiting credit notes being agreed with respective suppliers in turn. Creditor days as at 1 January 2023 were 30 compared to 65 days at 2 January 2022. This significant variation is due to the timing and value of month-end payment runs at the year-end, as the majority of our supplier payments are made at the end of the calendar month, whereas our accounting periods are on a 4-4-5 basis. We also received a much higher volume of late large furniture container deliveries, with longer payment terms, towards the end of 2021 versus 2022 which increased the 2021 comparative days calculation.
The Company’s energy consumption for the 52 weeks to 1 January 2023 was 2,169,181 kWh across our 4 sites. This equates to total greenhouse gas emissions of 479,887 kgs of Carbon Dioxide during that period. This is calculated by taking the sum of all electricity and gas usage in kWh from the respective meters at each site which are generated by Webbs Garden Centres Limited and excludes usage by our Tenants onsite. This has increased from the previous year due to the addition of our 4th Garden Centre at Millets Farm since July 2022 as well as all our stores being fully open and operational for the full year in 2022, whereas the Catering operations at our 3 stores were closed between January and April 2021 due to the lockdown periods enforced by the Government during the Covid-19 pandemic.
We also generated greenhouse gas emissions of approximately 71,693 kgs of Carbon Dioxide from fuel consumption by our own transport fleet during the period. This reflects us having our own fleet of 8 Lorries/Vans (reducing to 6 over the winter months) to deliver goods direct to customers (and between stores) from all 4 stores to significantly reduce the use of couriers. This has again increased from the previous year due to the addition of 2 vehicles as part of the acquisition of our Millets Farm centre, in addition to the increased volume of journeys to and from this new centre with stock from our central warehouse units at Wychbold since July 2022. However, we have fitted tracker devices into our fleet of vehicles in 2023 to ensure we can monitor their usage and look to reduce journeys wherever possible. We are always mindful of the environmental impact that travel can have, so our employees have continued to engage in video conferencing and digital communication methods to minimise the amount of travel required, both in the UK and overseas, and we continue to review the
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WEBBS GARDEN CENTRES LIMITED
DIRECTORS' REPORT (CONTINUED)
FOR THE 52 WEEKS ENDED 1 JANUARY 2023
cost and availability of Electric vehicles to suit our needs and the infrastructure required to support that future investment.
Please refer to the section under ‘Environment’ in the Strategic Report for further information on the Company’s Environmental and Sustainability strategy and measures which Webbs Garden Centres Limited has undertaken and is considering to improve energy efficiency in the period and in future, including new radiant heaters installed within our 3 stores in 2020 and future investment in more solar panels and LED lighting in the next 12-24 months which would result in Webbs being almost self-sufficient at its Wychbold site once this has been implemented.
There have been no significant events affecting the Company since the year end.
The auditors, Bishop Fleming LLP, will be proposed for reappointment in accordance with section 485 of the Companies Act 2006.
This report was approved by the board and signed on its behalf.
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WEBBS GARDEN CENTRES LIMITED
INDEPENDENT AUDITORS' REPORT TO THE MEMBERS OF WEBBS GARDEN CENTRES LIMITED
We have audited the financial statements of Webbs Garden Centres Limited (the 'parent Company') and its subsidiary (the 'Group') for the 52 weeks ended 1 January 2023, which comprise the Consolidated statement of comprehensive income, the Consolidated Statement of Financial Position, the Company Statement of Financial Position, 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. 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.
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WEBBS GARDEN CENTRES LIMITED
INDEPENDENT AUDITORS' REPORT TO THE MEMBERS OF WEBBS GARDEN CENTRES LIMITED (CONTINUED)
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 52 weeks 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.
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:
Identifying and assessing potential risks related to irregularities The procedures undertaken in order to identify and assess risks of material misstatement in respect of irregularities, including fraud and non-compliance with laws and regulations, are as follows:
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WEBBS GARDEN CENTRES LIMITED
INDEPENDENT AUDITORS' REPORT TO THE MEMBERS OF WEBBS GARDEN CENTRES LIMITED (CONTINUED)
∙We have considered the nature of the industry and sector, control environment and business performance;
∙We have considered the results of our enquires of management including the Finance team and Director about their own identification and assessment of the risk of irregularities.
∙For any matters identified we have obtained and reviewed the company's documentation of their policies and procedures relating to:
°Identifying, evaluating and complying with laws and regulation whether they were aware of any instances of non-compliance;
°Detecting and responding to the risk of fraud and whether they have knowledge of actual, suspected or alleged fraud; and
°The internal controls established to mitigate the risks of fraud or non-compliance with laws and regulations.
∙We have considered the matters discussed among the audit engagement team, including internal tax specialists regarding how and where fraud might occur in the financial statements and potential indicators of fraud.
∙As a result of these procedures, we considered the opportunities and incentived that may exist within the organisation for fraud and identified the greatest potential for fraud in the following areas:
°Revenue recognition; and
°Accounting estimates.
In common with all audits under ISAs (UK), we are also required to specific procedures to respond to the risk of management override.
We also obtained an understanding of the legal and regulatory frameworks that the company 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 included the Companies Act 2006 and tax legislation. In addition, we have considered provisions of other laws and regulations that do not have a direct effect on the financial statements but compliance with which may be fundamental to the company's ability to operate to avoid a material penalty. These include data protection regulation, health and safety regulations and employment legislation.
Audit response to risks identified
As a result of performing the above procedures, we have identified revenue recognition and accounting estimates as key audit matters related to the potential risk of fraud. Our procedures to respond to risks identified included the following:
∙Documenting and validating the control environment for income and debtors and carrying out walkthrough testing;
∙Undertaking substantive sample-based testing or proof in total calculations on all material revenue streams to ensure revenue has been recognised appropriately and accurately;
∙Considering manual income journals as part of our work on fraud risks documented above;
∙Reviewing the financial statement disclosures and testing to supporting documentation;
∙Enquiring of mangement concerning actual and potential litigation claims;
∙Performing analytical procedures to identify any unusual or unexpected relationships that may indicate risks of material misstatement;
∙Reading minutes of meetings of those charged with governance and reviewing correspondance with HMRC; 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 evaluting the business rationale of any signficant transactions that are unusual or outside the normal course of business.
We also communicated relevant laws and regulations and potential fraud risks to all engagement team members and remained alert to any indications of fraud or non-compliance with laws and regulations throughout the audit.
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WEBBS GARDEN CENTRES LIMITED
INDEPENDENT AUDITORS' REPORT TO THE MEMBERS OF WEBBS GARDEN CENTRES LIMITED (CONTINUED)
Our audit procedures were designed to respond to risks of material misstatement in the financial statements, recognising that the risk of not detecting a material misstatement due to fraud is higher than the risk of not detecting one resulting from an error, as fraud may involve deliberate concealment by, for example, forgery, misrepresentations or through collusion. There are inherent limitations in the audit procedures performed and the further removed non-compliance with laws and regulations is from the events and transactions reflected in the financial statements, the less likely we would become aware of it.
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
Chartered Accountants
Statutory Auditors
1-3 College Yard
WR1 2LB
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WEBBS GARDEN CENTRES LIMITED
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
FOR THE 52 WEEKS ENDED 1 JANUARY 2023
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WEBBS GARDEN CENTRES LIMITED
REGISTERED NUMBER:00777596
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
AS AT 1 JANUARY 2023
The financial statements were approved and authorised for issue by the board and were signed on its behalf by:
The notes on pages 21 to 51 form part of these financial statements.
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WEBBS GARDEN CENTRES LIMITED
REGISTERED NUMBER:00777596
COMPANY STATEMENT OF FINANCIAL POSITION
AS AT 1 JANUARY 2023
The financial statements were approved and authorised for issue by the board and were signed on its behalf by:
The notes on pages 21 to 51 form part of these financial statements.
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WEBBS GARDEN CENTRES LIMITED
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE 52 WEEKS ENDED 1 JANUARY 2023
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WEBBS GARDEN CENTRES LIMITED
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE 52 WEEKS ENDED 2 JANUARY 2022
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WEBBS GARDEN CENTRES LIMITED
COMPANY STATEMENT OF CHANGES IN EQUITY
FOR THE 52 WEEKS ENDED 1 JANUARY 2023
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WEBBS GARDEN CENTRES LIMITED
COMPANY STATEMENT OF CHANGES IN EQUITY
FOR THE 52 WEEKS ENDED 2 JANUARY 2022
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WEBBS GARDEN CENTRES LIMITED
CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE 52 WEEKS ENDED 1 JANUARY 2023
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WEBBS GARDEN CENTRES LIMITED
CONSOLIDATED ANALYSIS OF NET DEBT
FOR THE 52 WEEKS ENDED 1 JANUARY 2023
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WEBBS GARDEN CENTRES LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE 52 WEEKS ENDED 1 JANUARY 2023
Webbs Garden Centres Limited is a private company, limited by shares, registered in England and Wales. The registered office is Worcester Road, Wychbold, Droitwich, Worcestershire, WR9 0DG.
The company registration number is: 00777596. The presentation currency of the financial statements is the Pound Sterling (£).
2.ACCOUNTING POLICIES
The financial statements have been prepared under the historical cost convention unless otherwise specified within these accounting policies and in accordance with Financial Reporting Standard 102, the Financial Reporting Standard applicable in the UK and the Republic of Ireland and the Companies Act 2006.
Throughout the accounts, any balance stated as 2022 refers to the 52 weeks ending 1 January 2023. Likewise, any balance stated as 2021 refers to the 52 weeks ending 2 January 2022.
The preparation of financial statements in compliance with FRS 102 requires the use of certain critical accounting estimates. It also requires Group management to exercise judgment in applying the Group's accounting policies (see note 3).
The Company has taken advantage of the exemption allowed under section 408 of the Companies Act 2006 and has not presented its own Statement of comprehensive income in these financial statements.
The following principal accounting policies have been applied:
The consolidated financial statements present the results of the Company and its own subsidiaries ("the Group") as if they form a single entity. Intercompany transactions and balances between group companies are therefore eliminated in full.
The consolidated financial statements incorporate the results of business combinations using the purchase method. In the Statement of financial position, the acquiree's identifiable assets, liabilities and contingent liabilities are initially recognised at their fair values at the acquisition date. The results of acquired operations are included in the Consolidated statement of comprehensive income from the date on which control is obtained. They are deconsolidated from the date control ceases. In accordance with the transitional exemption available in FRS 102, the Group has chosen not to retrospectively apply the standard to business combinations that occurred before the date of transition to FRS 102.
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WEBBS GARDEN CENTRES LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE 52 WEEKS ENDED 1 JANUARY 2023
2.ACCOUNTING POLICIES (continued)
In the consolidated accounts, interests in associated undertakings are accounted for using the equity method of accounting. Under this method an equity investment is initially recognised at the transaction price (including transaction costs) and is subsequently adjusted to reflect the investors share of the profit or loss, other comprehensive income and equity of the associate. The Consolidated statement of comprehensive income includes the Group's share of the operating results, interest, pre-tax results and attributable taxation of such undertakings applying accounting policies consistent with those of the Group. In the Consolidated statement of financial position, the interests in associated undertakings are shown as the Group's share of the identifiable net assets, including any unamortised premium paid on acquisition. Any premium on acquisition is dealt with in accordance with the goodwill policy.
The Directors have considered the implications of external factors (such as the War between Russia and Ukraine and the current cost of living crisis) in relation to the risk of the business continuing to operate as a going concern and have concluded that there are sufficient cash resources in place to trade through the current economic climate, as well as having the ongoing support of our bank and funding providers as required. They have not identified any significant issues that are expected to affect the company's ability to continue as a going concern.
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WEBBS GARDEN CENTRES LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE 52 WEEKS ENDED 1 JANUARY 2023
2.ACCOUNTING POLICIES (continued)
Goodwill
Other intangible assets
All intangible assets are considered to have a finite useful life. If a reliable estimate of the useful life cannot be made, the useful life shall not exceed ten years.
The estimated useful lives range as follows:
Land is not depreciated. Depreciation on other assets is charged so as to allocate the cost of assets less their residual value over their estimated useful lives, using the straight-line method.
Depreciation is provided at the following annual rates in order to write off each asset over the estimated useful life or, if held under a finance lease, over the lease term, whichever is the shorter.
The assets' residual values, useful lives and depreciation methods are reviewed, and adjusted prospectively if appropriate, or if there is an indication of a significant change since the last reporting date.
Gains and losses on disposals are determined by comparing the proceeds with the carrying amount and are recognised in profit or loss.
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WEBBS GARDEN CENTRES LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE 52 WEEKS ENDED 1 JANUARY 2023
2.ACCOUNTING POLICIES (continued)
Fair values are determined from market based evidence normally undertaken by professionally qualified valuers.
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WEBBS GARDEN CENTRES LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE 52 WEEKS ENDED 1 JANUARY 2023
2.ACCOUNTING POLICIES (continued)
The Group has elected to apply the provisions of Section 11 “Basic Financial Instruments” of FRS 102 to all of its financial instruments.
Financial instruments are recognised in the Group's Statement of financial position when the Group becomes party to the contractual provisions of the instrument.
Financial assets and liabilities are offset, with the net amounts presented in the financial statements, when there is a legally enforceable right to set off the recognised amounts and there is an intention to settle on a net basis or to realise the asset and settle the liability simultaneously.
Basic financial assets
Basic financial assets, which include trade and other receivables, cash and bank balances, are initially measured at their transaction price including transaction costs and are subsequently carried at their amortised cost using the effective interest method, less any provision for impairment, 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.
Discounting is omitted where the effect of discounting is immaterial. The Group's cash and cash equivalents, trade and most other receivables due with the operating cycle fall into this category of financial instruments.
Other financial assets
Other financial assets, which includes investments in equity instruments which are not classified as subsidiaries, associates or joint ventures, are initially measured at fair value, which is normally the recognised transaction price. Such assets are subsequently measured at fair value with the changes in fair value being recognised in the profit or loss. Where other financial assets are not publicly traded, hence their fair value cannot be measured reliably, they are measured at cost less impairment.
Impairment of financial assets
Financial assets are assessed for indicators of impairment at each reporting date.
Financial assets are impaired when events, subsequent to their initial recognition, indicate the estimated future cash flows derived from the financial asset(s) have been adversely impacted. The impairment loss will be the difference between the current carrying amount and the present value of the future cash flows at the asset(s) original effective interest rate.
If there is a favourable change in relation to the events surrounding the impairment loss then the impairment can be reviewed for possible reversal. The reversal will not cause the current carrying amount to exceed the original carrying amount had the impairment not been recognised. The impairment reversal is recognised in the profit or loss.
Financial liabilities
Financial liabilities and equity instruments are classified according to the substance of the contractual arrangements entered into. An equity instruments any contract that evidences a residual interest in the assets of the Group after the deduction of all its liabilities.
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WEBBS GARDEN CENTRES LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE 52 WEEKS ENDED 1 JANUARY 2023
2.ACCOUNTING POLICIES (continued)
Basic financial liabilities, which include trade and other payables, bank loans, other loans and loans due to fellow group companies are initially measured at their transaction price after transaction costs. When this constitutes a financing transaction, whereby the debt instrument is measured at the present value of the future receipts discounted at a market rate of interest. Discounting is omitted where the effect of discounting is immaterial.
Debt instruments are subsequently carried at their amortised cost using the effective interest rate method.
Trade payables are obligations to pay for goods and services that have been acquired in the ordinary course of business from suppliers. Trade payables are classified as current liabilities if the payment is due within one year. If not, they represent non-current liabilities. Trade payables are initially recognised at their transaction price and subsequently are measured at amortised cost using the effective interest method. Discounting is omitted where the effect of discounting is immaterial.
Other financial instruments
Derivatives, including forward exchange contracts and options, are not classified as basic financial instruments. These are initially recognised at fair value on the date the derivative contract is entered into, with costs being charged to the profit or loss. They are subsequently measured at fair value with changes in the profit or loss.
Debt instruments that do not meet the conditions as set out in FRS 102 paragraph 11.9 are subsequently measured at fair value through the profit or loss. This recognition and measurement would also apply to financial instruments where the performance is evaluated on a fair value basis as with a documented risk management or investment strategy.
The Company enters into basic financial instrument transactions that result in the recognition of financial assets and liabilities like trade and other debtors and creditors, loans from banks and other third parties, loans to related parties and investments in non-puttable ordinary shares.
Derecognition of financial assets
Financial assets are derecognised when their contractual right to future cash flow expire, or are settled, or when the Group transfers the asset and substantially all the risks and rewards of ownership to another party. If significant risks and rewards of ownership are retained after the transfer to another party, then the Group will continue to recognise the value of the portion of the risks and rewards retained.
Derecognition of financial liabilities
Financial liabilities are derecognised when the Group's contractual obligations expire or are discharged or cancelled.
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WEBBS GARDEN CENTRES LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE 52 WEEKS ENDED 1 JANUARY 2023
2.ACCOUNTING POLICIES (continued)
Grants of a revenue nature are recognised in the Consolidated statement of comprehensive income in the same period as the related expenditure.
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WEBBS GARDEN CENTRES LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE 52 WEEKS ENDED 1 JANUARY 2023
2.ACCOUNTING POLICIES (continued)
Provisions are measured as the best estimate of the amount required to settle the obligation, taking into account the related risks and uncertainties.
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WEBBS GARDEN CENTRES LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE 52 WEEKS ENDED 1 JANUARY 2023
2.ACCOUNTING POLICIES (continued)
If it is not possible to distinguish between the research phase and the development phase of an internal project, the expenditure is treated as if it were all incurred in the research phase only.
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WEBBS GARDEN CENTRES LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE 52 WEEKS ENDED 1 JANUARY 2023
The difference between the purchase price and estimated residual value of a fixed asset which has a limited useful economic life should be allocated on a systematic basis to each accounting period during the useful life of the asset. The depreciation/amortisation charge for each period should be recognised as an expense in the profit and loss account unless it is permitted to be included in the carrying amount of another asset. For each major class of depreciable asset the method of depreciation/amortisation and the or depreciation/amortisation rates have been disclosed. Property Valuation The properties are revalued periodically, as required, by the Directors and independent valuers. The valuation is subject to, among other factors, the nature of the property, market conditions, expected trade and rental income. As a result, the valuation incorporated into the financial statements is subject to a degree of uncertainty and is made on the basis of assumptions which may prove to be inaccurate particularly in periods of volatility or low transaction flow in the market.
All turnover arose within the United Kingdom and related to the one principal activity of the company.
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WEBBS GARDEN CENTRES LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE 52 WEEKS ENDED 1 JANUARY 2023
Page 31
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WEBBS GARDEN CENTRES LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE 52 WEEKS ENDED 1 JANUARY 2023
Page 32
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WEBBS GARDEN CENTRES LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE 52 WEEKS ENDED 1 JANUARY 2023
Page 33
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WEBBS GARDEN CENTRES LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE 52 WEEKS ENDED 1 JANUARY 2023
12.TAXATION (CONTINUED)
The Finance Act 2021 increased the main rate of corporation tax from 19% to 25% with effect from 1 April 2023. The effect of this change has been reflected in the closing deferred tax balances at 1 January 2023.
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WEBBS GARDEN CENTRES LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE 52 WEEKS ENDED 1 JANUARY 2023
Page 35
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WEBBS GARDEN CENTRES LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE 52 WEEKS ENDED 1 JANUARY 2023
14.INTANGIBLE ASSETS (CONTINUED)
Page 36
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WEBBS GARDEN CENTRES LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE 52 WEEKS ENDED 1 JANUARY 2023
Page 37
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WEBBS GARDEN CENTRES LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE 52 WEEKS ENDED 1 JANUARY 2023
15.TANGIBLE FIXED ASSETS (CONTINUED)
Page 38
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WEBBS GARDEN CENTRES LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE 52 WEEKS ENDED 1 JANUARY 2023
15.TANGIBLE FIXED ASSETS (CONTINUED)
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WEBBS GARDEN CENTRES LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE 52 WEEKS ENDED 1 JANUARY 2023
15.TANGIBLE FIXED ASSETS (CONTINUED)
Page 40
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WEBBS GARDEN CENTRES LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE 52 WEEKS ENDED 1 JANUARY 2023
15.TANGIBLE FIXED ASSETS (CONTINUED)
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WEBBS GARDEN CENTRES LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE 52 WEEKS ENDED 1 JANUARY 2023
Page 42
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WEBBS GARDEN CENTRES LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE 52 WEEKS ENDED 1 JANUARY 2023
The 2021 valuations were made by Savills, on an open market value for existing use basis.
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WEBBS GARDEN CENTRES LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE 52 WEEKS ENDED 1 JANUARY 2023
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WEBBS GARDEN CENTRES LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE 52 WEEKS ENDED 1 JANUARY 2023
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WEBBS GARDEN CENTRES LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE 52 WEEKS ENDED 1 JANUARY 2023
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WEBBS GARDEN CENTRES LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE 52 WEEKS ENDED 1 JANUARY 2023
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WEBBS GARDEN CENTRES LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE 52 WEEKS ENDED 1 JANUARY 2023
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WEBBS GARDEN CENTRES LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE 52 WEEKS ENDED 1 JANUARY 2023
Share premium account
Revaluation reserve
Capital redemption reserve
Profit and loss account
A prior period adjustment has been made in respect of a professional valuation carried out on the land and buildings in 2021 that had not been adjusted for in the prior period financial statements. The effect of this adjustment was to increase the value of fixed assets in the prior period by £3m and to increase the deferred tax liability in the prior period by £750k. The overall effect on reserves carried forward as at 2 January 2022 was an increase of £2,250,000.
The company operates a defined contribution pension scheme the assets of which are held in independently administered funds.
The pension cost charge represents contributions payable by the company and amounted to £ The company had no outstanding liabilites at year end (2021: £Nil) in respect of the defined contribution pension scheme.
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WEBBS GARDEN CENTRES LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE 52 WEEKS ENDED 1 JANUARY 2023
The following advances and credits to a director subsisted during the years ended 1 January 2023 and 2 January 2022.
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WEBBS GARDEN CENTRES LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE 52 WEEKS ENDED 1 JANUARY 2023
The company is controlled by majority shareholder Edward Alexander Broughton Webb.
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