Company Registration No. 01272637 (England and Wales)
FROSTS GARDEN CENTRE LIMITED
ANNUAL REPORT AND FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 JULY 2018
FROSTS GARDEN CENTRE LIMITED
COMPANY INFORMATION
Directors
J A Frost
J C Frost
R S Towers
J M Tonge
S Friend
(Appointed 1 August 2017)
C Roberts
(Appointed 1 August 2018)
Secretary
J M Tonge
Company number
01272637
Registered office
Newport Road
Woburn Sands
Milton Keynes
Bucks
MK17 8UE
Auditor
UHY Hacker Young (East) Limited
PO Box 501
The Nexus Building
Broadway
Letchworth Garden City
Herts
SG6 9BL
Bankers
NatWest Bank PLC
215 Queensway
Bletchley
Milton Keynes
Buckinghamshire
MK2 2YY
Solicitors
Freeths
Routeco Office Park
Davy Avenue
Knowlhill
Milton Keynes
Bucks
MK5 8HJ
FROSTS GARDEN CENTRE LIMITED
CONTENTS
Page
Strategic report
1
Directors' report
2 - 3
Directors' responsibilities statement
4
Independent auditor's report
5 - 7
Profit and loss account
8
Statement of comprehensive income
9
Balance sheet
10
Statement of changes in equity
11
Statement of cash flows
12
Notes to the financial statements
13 - 27
FROSTS GARDEN CENTRE LIMITED
STRATEGIC REPORT
FOR THE YEAR ENDED 31 JULY 2018
- 1 -
The directors present the strategic report for the year ended 31 July 2018.
Fair review of the business
A satisfactory trading performance saw sales grow 2.6% year-on-year despite continuing economic uncertainty and a fiercely competitive retail environment. Leisure was the star performer, up 11%, more than compensating for annual declines in horticulture and events while restaurants showed modest growth of 1.2%.
Margins increased from 46.9% to 48.1%, partly offset by a rise in overheads which was largely driven by increased investment behind in-house order fulfilment capability.
Operating profit more than doubled year-on-year and cash generation was strong thanks to improved working capital management and the end of a major store refurbishment programme over the previous two years.
The management and control of risks for the company is embedded within basic operating procedures. These procedures comprise a range of measures including monthly reporting, self-assessment and continuous performance monitoring by senior management.
Financial risk management and objectives
The company finances its operations through retained profits and cash together with an overdraft facility. The main purpose for the application of cash and utilisation of bank facilities is to maintain adequate resources to meet the company’s working capital requirements.
The group does not trade in financial instruments.
The board reviews and agrees policies for managing each of the following risks:-
Interest rate risk – the company enjoys a good relationship with its bankers and negotiates such that the company faces little in the way of risk from an increase in interest rates.
Liquidity risk - the company seeks to ensure that it has sufficient liquidity available to meet foreseeable needs and there is significant headroom in the overdraft facility.
Currency risk – the company has barely no exposure to translation or transaction foreign exchange risks.
Credit risk – all customers who wish to trade on credit terms are subject to vetting procedures and debtor balances are monitored by a credit controller on an ongoing basis.
J C Frost
Director
24 April 2019
FROSTS GARDEN CENTRE LIMITED
DIRECTORS' REPORT
FOR THE YEAR ENDED 31 JULY 2018
- 2 -
The directors present their annual report and financial statements for the year ended 31 July 2018.
Principal activities
The principal activity of the company continued to be that of the operation of three garden centres
and a B2C website.
Directors
The directors who held office during the year and up to the date of signature of the financial statements were as follows:
J A Frost
J C Frost
R E Frost
(Resigned 31 July 2018)
S A Frost
(Resigned 31 July 2018)
R S Towers
B Cook
(Resigned 31 July 2018)
H S Frost
(Resigned 31 July 2018)
J M Tonge
S Friend
(Appointed 1 August 2017)
C Harper
(Appointed 1 October 2017 and resigned 10 August 2018)
C Roberts
(Appointed 1 August 2018)
Results and dividends
The results for the year are set out on page 8.
Interim dividends were paid amounting to £2,337,390. The directors do not recommend payment of a final dividend.
Financial instruments
Financial risk management
The directors are satisfied that the company's exposure to risk from interest rates, liquidity, credit and foreign exchange are adequately managed and mitigated.
Disabled persons
Applications for employment by disabled persons are always fully considered, bearing in mind the aptitudes of the applicant concerned. In the event of members of staff becoming disabled, every effort is made to ensure that their employment within the company continues and that the appropriate training is arranged. It is the policy of the company that the training, career development and promotion of disabled persons should, as far as possible, be identical to that of other employees.
Employee involvement
The company's policy is to consult and discuss with employees, through unions, staff councils and at meetings, matters likely to affect employees' interests.
Information about matters of concern to employees is given through information bulletins and reports which seek to achieve a common awareness on the part of all employees of the financial and economic factors affecting the company's performance.
Future developments
The directors remain committed to sales growth in all four of the company’s operating divisions – horticulture, leisure, restaurants and events - and through both its retail stores and website, whilst striving for greater operational efficiencies to mitigate the continuing pressure on profit margins.
FROSTS GARDEN CENTRE LIMITED
DIRECTORS' REPORT (CONTINUED)
FOR THE YEAR ENDED 31 JULY 2018
- 3 -
Auditor
The auditor, UHY Hacker Young (East) Limited, 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 company’s auditor is unaware. Additionally, the directors individually have taken all the necessary steps that they ought to have taken as directors in order to make themselves aware of all relevant audit information and to establish that the company’s auditor is aware of that information.
On behalf of the board
J C Frost
Director
24 April 2019
FROSTS GARDEN CENTRE LIMITED
DIRECTORS' RESPONSIBILITIES STATEMENT
FOR THE YEAR ENDED 31 JULY 2018
- 4 -
The directors are responsible for preparing the annual report and the financial statements in accordance with applicable law and regulations.
Company law requires the directors to prepare financial statements for each financial year. Under that law the directors have elected to prepare the financial statements in accordance with United Kingdom Generally Accepted Accounting Practice (United Kingdom Accounting Standards and applicable law). Under company law the directors must not approve the financial statements unless they are satisfied that they give a true and fair view of the state of affairs of the company and of the profit or loss of the company for that period. In preparing these financial statements, the directors are required to:
-
select suitable accounting policies and then apply them consistently;
-
make judgements and accounting estimates that are reasonable and prudent;
-
prepare the financial statements on the going concern basis unless it is inappropriate to presume that the company will continue in business.
The directors are responsible for keeping adequate accounting records that are sufficient to show and explain the company’s transactions and disclose with reasonable accuracy at any time the financial position of the company and enable them to ensure that the financial statements comply with the Companies Act 2006. They are also responsible for safeguarding the assets of the company and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.
FROSTS GARDEN CENTRE LIMITED
INDEPENDENT AUDITOR'S REPORT
TO THE MEMBERS OF FROSTS GARDEN CENTRE LIMITED
- 5 -
Opinion
We have audited the financial statements of Frosts Garden Centre Limited (the 'company') for the year ended 31 July 2018 which comprise the profit and loss account, the statement of comprehensive income, the balance sheet, the statement of changes in equity, the statement of cash flows and notes to the financial statements, including 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 company's affairs as at 31 July 2018 and of its profit for the year then ended;
-
have been properly prepared in accordance with United Kingdom Generally Accepted Accounting Practice; and
-
have been prepared in accordance with the requirements of the Companies Act 2006.
We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and applicable law. Our responsibilities under those standards are further described in the Auditor's
responsibilities for the audit of the financial statements
section of our report. We are independent of the company in accordance with the ethical requirements that are relevant to our audit of the financial statements in the UK, including the FRC’s Ethical Standard
, and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
Conclusions relating to going concern
We have nothing to report in respect of the following matters in relation to which the ISAs (UK) require us to report to you where:
-
the directors' use of the going concern basis of accounting in the preparation of the financial statements is not appropriate; or
-
the directors have not disclosed in the financial statements any identified material uncertainties that may cast significant doubt about the company’s ability to continue to adopt the going concern basis of accounting for a period of at least twelve months from the date when the financial statements are authorised for issue
.
The directors are responsible for the other information. The other information comprises the information included in the annual report, other than the financial statements and our auditor’s report thereon. Our opinion on the
financial statements
does not cover the other information and, except to the extent otherwise explicitly stated in our report, we do not express any form of assurance conclusion thereon.
In connection with our audit of the financial statements, 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 audit or otherwise appears to be materially misstated. If we identify such material inconsistencies or apparent material misstatements, we are required to determine whether there is a material misstatement in the financial statements or a material misstatement of the other information. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact.
We have nothing to report in this regard.
Opinions on other matters prescribed by the Companies Act 2006
In our opinion, based on the work undertaken in the course of our audit
:
-
the information given in the strategic report and the directors' r
eport for the financial year for which the financial statements are prepared is consistent with the financial statements
; and
-
the strategic report and the directors' report have been prepared in accordance with applicable legal requirements.
FROSTS GARDEN CENTRE LIMITED
INDEPENDENT AUDITOR'S REPORT (CONTINUED)
TO THE MEMBERS OF FROSTS GARDEN CENTRE LIMITED
- 6 -
Matters on which we are required to report by exception
In the light of the knowledge and understanding of the company and its environment obtained in the course of the audit, we have not identifie
d
material misstatements in the strategic report and the directors'
r
eport
.
We have nothing to report in respect of the following matters where the Companies Act 2006 requires us to report to you if, in our opinion:
-
adequate accounting records have not been kept, or returns adequate for our audit have not been received from branches not visited by us; or
-
the financial statements are not in agreement with the accounting records and returns; or
-
certain disclosures of directors' remuneration specified by law are not made; or
-
we have not received all the information and explanations we require for our audit.
Responsibilities of directors
As explained more fully in the directors'
r
esponsibilities
s
tatement, the directors are responsible for the preparation of the financial statements and for being satisfied that they give a true and fair view, and for such internal control as the directors determine is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.
In preparing the financial statements, the directors are responsible for assessing the company’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the directors either intend to liquidate the company or to cease operations, or have no realistic alternative but to do so.
Auditor's responsibilities for the audit of the financial statements
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with ISAs (UK) will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements.
A further description of our responsibilities for the audit of the financial statements is located on the
Financial Reporting Council’s website at: http://www.frc.org.uk/auditorsresponsibilities
.
This description forms part of our auditor’s report.
FROSTS GARDEN CENTRE LIMITED
INDEPENDENT AUDITOR'S REPORT (CONTINUED)
TO THE MEMBERS OF FROSTS GARDEN CENTRE LIMITED
- 7 -
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.
Peter Woodhall FCA (Senior Statutory Auditor)
for and on behalf of UHY Hacker Young (East) Limited
25 April 2019
Chartered Accountants
PO Box 501
Statutory Auditor
The Nexus Building
Broadway
Letchworth Garden City
Herts
SG6 9BL
FROSTS GARDEN CENTRE LIMITED
PROFIT AND LOSS ACCOUNT
FOR THE YEAR ENDED 31 JULY 2018
- 8 -
2018
2017
Notes
£
£
Turnover
3
19,897,716
19,402,177
Cost of sales
(10,333,804)
(10,299,644)
Gross profit
9,563,912
9,102,533
Administrative expenses
(9,706,125)
(9,459,344)
Other operating income
520,857
486,187
Operating profit
4
378,644
129,376
Interest payable and similar expenses
7
(2,228)
(1,444)
Disposal of subsidiary
8
-
1,990,466
Profit before taxation
376,416
2,118,398
Tax on profit
9
25,972
(27,220)
Profit for the financial year
402,388
2,091,178
The Profit And Loss Account has been prepared on the basis that all operations are continuing operations.
FROSTS GARDEN CENTRE LIMITED
STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEAR ENDED 31 JULY 2018
- 9 -
2018
2017
£
£
Profit for the year
402,388
2,091,178
Other comprehensive income
-
-
Total comprehensive income for the year
402,388
2,091,178
FROSTS GARDEN CENTRE LIMITED
BALANCE SHEET
AS AT
31 JULY 2018
31 July 2018
- 10 -
2018
2017
Notes
£
£
£
£
Fixed assets
Goodwill
11
192,509
253,265
Tangible assets
12
2,931,867
3,441,373
3,124,376
3,694,638
Current assets
Stocks
14
1,972,981
2,203,480
Debtors
15
859,083
855,769
Cash at bank and in hand
1,571,158
472,804
4,403,222
3,532,053
Creditors: amounts falling due within one year
16
(2,941,436)
(2,743,165)
Net current assets
1,461,786
788,888
Total assets less current liabilities
4,586,162
4,483,526
Creditors: amounts falling due after more than one year
17
(2,070,855)
(7,243)
Provisions for liabilities
20
(33,130)
(59,104)
Net assets
2,482,177
4,417,179
Capital and reserves
Called up share capital
23
12,834
12,834
Profit and loss reserves
2,469,343
4,404,345
Total equity
2,482,177
4,417,179
The financial statements were approved by the board of directors and authorised for issue on 24 April 2019 and are signed on its behalf by:
J C Frost
Director
Company Registration No. 01272637
FROSTS GARDEN CENTRE LIMITED
STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 JULY 2018
- 11 -
Share capital
Profit and loss reserves
Total
Notes
£
£
£
Balance at 1 August 2016
12,834
4,313,167
4,326,001
Year ended 31 July 2017:
Profit and total comprehensive income for the year
-
2,091,178
2,091,178
Dividends
10
-
(2,000,000)
(2,000,000)
Balance at 31 July 2017
12,834
4,404,345
4,417,179
Year ended 31 July 2018:
Profit and total comprehensive income for the year
-
402,388
402,388
Dividends
10
-
(2,337,390)
(2,337,390)
Balance at 31 July 2018
12,834
2,469,343
2,482,177
FROSTS GARDEN CENTRE LIMITED
STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED 31 JULY 2018
- 12 -
2018
2017
Notes
£
£
£
£
Cash flows from operating activities
Cash generated from operations
28
1,496,811
792,596
Interest paid
(2,228)
(1,444)
Income taxes paid
(63,570)
(56,945)
Net cash inflow from operating activities
1,431,013
734,207
Investing activities
Purchase of tangible fixed assets
(296,609)
(786,731)
Proceeds on disposal of tangible fixed assets
5,934
12,805
Proceeds on disposal of subsidiaries
-
9,534
Proceeds on disposal of fixed asset investments
-
1,990,466
Proceeds from other investments and loans
3,946
(3,882)
Net cash (used in)/generated from investing activities
(286,729)
1,222,192
Financing activities
Proceeds of new bank loans
2,300,000
-
Payment of finance leases obligations
(8,540)
(13,844)
Dividends paid
(2,337,390)
(2,000,000)
Net cash used in financing activities
(45,930)
(2,013,844)
Net increase/(decrease) in cash and cash equivalents
1,098,354
(57,445)
Cash and cash equivalents at beginning of year
472,804
530,249
Cash and cash equivalents at end of year
1,571,158
472,804
FROSTS GARDEN CENTRE LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 JULY 2018
- 13 -
1
Accounting policies
Company information
Frosts Garden Centre Limited is a
private
company
limited by shares
incorporated in England and Wales.
The registered office is
Newport Road, Woburn Sands, Milton Keynes, Bucks, MK17 8UE.
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 a
mounts
in these financial statements are
rounded to the nearest £.
The financial statements have been prepared under the historical cost convention. The principal accounting policies adopted are set out below.
This 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 financial statements of the company are consolidated in the financial statements of
FGC Holdings Ltd
. These consolidated financial statements are available from its registered office,
Woburn Sands, Milton Keynes, Buckinghamshire, United Kingdom, MK17 8UE
.
1.2
Going concern
A
t the time of approving the financial statements
,
t
he directors have a reasonable expectation that the
company
has adequate resources to continue in operational existence for the foreseeable future. Thus
t
he directors continue to adopt the going concern basis of accounting in preparing the financial statements.
1.3
Turnover
Turnover represents amounts receivable for goods and services net of VAT and trade discounts. It is recognised when the risks and rewards have been transferred to the customer, in this case it is when the item is scanned through the tills.
1.4
Intangible fixed assets - goodwill
Acquired goodwill is written off in equal annual instalments over its estimated useful economic life of 10 years.
1.5
Tangible fixed assets
Tangible fixed assets
are initially measured at cost and subsequently measured at cost or valuation, net of depreciation and any impairment losses.
FROSTS GARDEN CENTRE LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 JULY 2018
1
Accounting policies
(Continued)
- 14 -
Tangible fixed assets are stated at cost less depreciation. Depreciation is provided at rates calculated to write off the cost less estimated residual value of each asset over its expected useful life on a strict monthly basis, using the straight line method, as follows:
Land and buildings freehold
Land is not depreciated. Buildings between 5%-20% straight line
Land and buildings leasehold
Between 5%-10% straight line
Plant and machinery
Between 5%-50% straight line
Fixtures and fittings
Between 5%-50% straight line
Motor vehicles
20% straight line
The gain or loss arising on the disposal of an asset is determined as the difference between the sale proceeds and the carrying value of the asset, and
is credited or charged to profit or loss
.
1.6
Impairment of fixed assets
At each reporting
period
end date, the
company
reviews the carrying amounts of its tangible
and intangible assets to determine whether there is any indication that those assets have suffered an impairment loss. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment loss (if any).
1.7
Stocks
Stocks
are stated at the lower of cost and
net realisable value. Cost is arrived at on an average invoice cost basis. Specific provisions are made where net realisable value of stock is less than its average invoice cost, with amounts being written off to the profit and loss account when they arise.
1.8
Cash and cash equivalents
Cash and cash equivalents include cash in hand
, bank
and bank overdrafts. Bank overdrafts are shown within borrowings in current liabilities.
1.9
Financial instruments
The company has elected to apply the provisions of Section 11 ‘Basic Financial Instruments’ and Section 12 ‘Other Financial Instruments Issues’ of FRS 102 to all of its financial instruments.
Financial instruments are recognised in the company's balance sheet when the company becomes party to the contractual provisions of the instrument.
Financial assets and liabilities are offset
, with
the net amounts presented in the financial statements
,
when there is a legally enforceable right to set off the recognised amounts and there is an intention to settle on a net basis or to realise the asset and settle the liability simultaneously.
Basic financial assets
Basic financial assets, which include debtors and cash and bank balances, are initially measured at transaction price including transaction costs and are subsequently carried at amortised cost using the effective interest
method unless the arrangement constitutes a financing transaction, where the transaction is measured at the present value of the future receipts discounted at a market rate of interest.
Financial assets classified as receivable within one year are not amortised.
FROSTS GARDEN CENTRE LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 JULY 2018
1
Accounting policies
(Continued)
- 15 -
Other financial assets
Other financial assets, including investments in equity instruments which are not subsidiaries, associates or joint ventures, are initially measured at fair value, which is normally the transaction price. Such assets are subsequently carried at fair value and the changes in fair value are recognised in profit or loss, except that investments in equity instruments that are not publicly traded and whose fair values cannot be measured reliably are measured at cost less impairment.
Impairment of financial assets
Financial assets, other than those
held
at
fair value through profit and loss
, are assessed for indicators of impairment at each reporting end date.
Financial assets are impaired where there is objective evidence that, as a result of one or more events that occurred after the initial recognition of the financial asset, the estimated future cash flows have been affected.
If an asset is impaired, the impairment loss is the difference between the carrying amount and the present value of the estimated cash flows discounted at the asset’s original effective interest rate. The impairment loss is recognised in profit or loss.
If there is a decrease in the impairment loss arising from an event occurring after the impairment was recognised, the impairment is reversed. The reversal is such that the current carrying amount does not exceed what the carrying amount would have been, had the impairment not previously been recognised. The impairment reversal is recognised in profit or loss.
Derecognition of financial assets
Financial assets are derecognised only when the contractual rights to the cash flows from the asset expire or are settled, or when
the company
transfers the financial asset and substantially all the risks and rewards of ownership to another entity, or if some significant risks and rewards of ownership are retained but control of the asset has transferred to another party that is able to sell the asset in its entirety to an unrelated third party.
Classification of financial liabilities
Financial liabilities and equity instruments are classified according to the substance of the contractual arrangements entered into. An equity instrument is any contract that evidences a residual interest in the assets of the company after deducting all of its liabilities.
Basic financial liabilities
Basic financial liabilities, including creditors, bank loans, loans from
fellow group companies and preference shares that are classified as debt, are
initially recognised at transaction price unless the arrangement constitutes a
financing transaction, where the debt instrument is measured at the present value of
the future
paymen
ts discounted at a market rate of interest.
Financial liabilities classified as payable within one year are not amortised.
Debt instruments are subsequently carried at amortised cost, using the effective
interest rate method.
Trade creditors
are obligations to pay for goods or services that have been acquired
in the ordinary course of business from suppliers. A
m
ounts payable are classified as
current liabilities if payment is due within one year or less. If not, they are presented
as non-current liabilities. Trade creditors are recognised initially at transaction price
and subsequently measured at amortised cost using the effective interest method.
FROSTS GARDEN CENTRE LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 JULY 2018
1
Accounting policies
(Continued)
- 16 -
Other financial liabilities
Derivatives, including interest rate swaps and forward foreign exchange contracts,
are not basic financial instruments. Derivatives are initially recognised at fair value on the date a derivative contract is entered into and are
s
ubsequently re-measured at their fair value. Changes in the fair value of derivatives are recognised in profit or loss in finance costs or finance income as appropriate, unless hedge accounting is applied and the hedge is a cash flow hedge.
Debt instruments that do not meet the conditions in FRS 102 paragraph 11.9 are subsequently measured at fair value through profit or loss. Debt instruments may be designated as
being measured at
fair value though profit or loss to eliminate or reduce an accounting mismatch or if the instruments are measured and their performance evaluated on a fair value basis in accordance with a documented risk management or investment strategy.
Derecognition of financial liabilities
Financial liabilities are derecognised when the company’s contractual obligations
expire or are discharged or cancelled.
1.10
Equity instruments
Equity instruments issued by the company are recorded at the proceeds received, net of transaction costs. Dividends payable on equity instruments are recognised as liabilities once they are no longer at the discretion of the company.
1.11
Taxation
The tax expense represents the sum of the tax currently payable and deferred tax.
Current tax
The tax currently payable is based on taxable profit for the year. Taxable profit differs from net profit as reported in the profit and loss account because it excludes items of income or expense that are taxable or deductible in other years and it further excludes items that are never taxable or deductible. The
company’s
liability for current tax is calculated using tax rates that have been enacted or substantively enacted by the reporting end date.
Deferred tax
Deferred tax arises as a result of including items of income and expenditure in taxation computations in periods different from those in which they are included in the company's accounts. Deferred tax is provided in full on timing differences that result in an obligation to pay more (or less) tax at a future date, at the average tax rates that are expected to apply when the timing differences reverse, based on current tax rates and laws.
1.12
Employee benefits
The costs of short-term employee benefits are recognised as a liability and an expense
.
The cost of any unused holiday entitlement is recognised in the period in which the employee’s services are received.
Termination benefits are recognised immediately as an expense when the company is demonstrably committed to terminate the employment of an employee or to provide termination benefits.
1.13
Retirement benefits
The company operates a defined contribution pension. The pension costs charged in the financial statements represent the contributions payable by the company during the year. Differences between contributions payable in the year and contribution actually paid are shown as either accruals or prepayments in the balance sheet.
FROSTS GARDEN CENTRE LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 JULY 2018
1
Accounting policies
(Continued)
- 17 -
1.14
Leases
Leases are classified as finance leases whenever the terms of the lease transfer substantially all the risks and rewards of ownership to the lessees. All other leases are classified as operating leases.
Assets held under finance leases are recognised as assets at the lower of the assets fair
value at the date of inception and the present value of the minimum lease payments. The related liability is included in the balance sheet as a finance lease obligation. Lease payments are treated as consisting of capital and interest elements. The interest is charged to the profit and loss account 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 income 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 lease asset are consumed.
2
Judgements and key sources of estimation uncertainty
In the application of the company’s accounting policies, the directors are required to make judgements, estimates and assumptions about the carrying amount of assets and liabilities that are not readily apparent from other sources. The estimates and associated assumptions are based on historical experience and other factors that are considered to be relevant. Actual results may differ from these estimates.
The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised where the revision affects only that period, or in the period of the revision and future periods where the revision affects both current and future periods.
3
Turnover and other revenue
An analysis of the company's turnover is as follows:
2018
2017
£
£
Turnover analysed by class of business
Horticulture
7,250,547
7,552,483
Leisure
8,534,850
7,728,127
Restaurant
3,220,178
3,182,240
Events
892,141
939,327
19,897,716
19,402,177
2018
2017
£
£
Other significant revenue
Commissions received
312,697
283,978
FROSTS GARDEN CENTRE LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 JULY 2018
- 18 -
4
Operating profit
2018
2017
Operating profit for the year is stated after charging/(crediting):
£
£
Fees payable to the company's auditor for the audit of the company's financial statements
18,975
19,790
Depreciation of owned tangible fixed assets
837,615
793,006
Depreciation of tangible fixed assets held under finance leases
12,816
5,840
Profit on disposal of tangible fixed assets
-
(898)
Amortisation of intangible assets
60,756
60,756
Cost of stocks recognised as an expense
10,333,804
10,299,644
Operating lease charges
667,380
676,474
5
Employees
The average monthly number of persons (including directors) employed by the company during the year was:
2018
2017
Number
Number
Administration
40
38
Retail
282
282
322
320
Their aggregate remuneration comprised:
2018
2017
£
£
Wages and salaries
5,067,725
4,994,168
Social security costs
327,527
305,472
Pension costs
94,301
80,525
5,489,553
5,380,165
6
Directors' remuneration
2018
2017
£
£
Remuneration for qualifying services
532,817
345,654
Company pension contributions to defined contribution schemes
24,584
15,952
557,401
361,606
The number of directors for whom retirement benefits are accruing under defined contribution schemes amounted to 3 (2017 - 3).
FROSTS GARDEN CENTRE LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 JULY 2018
6
Directors' remuneration
(Continued)
- 19 -
Remuneration disclosed above include the following amounts paid to the highest paid director:
2018
2017
£
£
Remuneration for qualifying services
115,040
92,750
Company pension contributions to defined contribution schemes
-
11,380
Directors remuneration includes benefits in kind of £25,536 (2017: £35,059).
7
Interest payable and similar expenses
2018
2017
£
£
Interest on financial liabilities measured at amortised cost:
Interest on bank overdrafts and loans
2,228
1,444
8
Disposal of subsidiary
fixed asset investments
2018
2017
£
£
Gain on disposal of fixed asset investments
-
1,990,466
9
Taxation
2018
2017
£
£
Current tax
UK corporation tax on profits for the current period
-
63,568
Deferred tax
Origination and reversal of timing differences
(25,972)
(36,348)
Total tax (credit)/charge
(25,972)
27,220
A reduction in the UK corporation tax rate from 21% to 20% (effective from 1 April 2015) was substantively enacted on 2 July 2013. Further reductions to 19% (effective from 1 April 2017) and to 18% (effective 1 April 2020) were substantively enacted on 26 October 2015, and an additional reduction to 17% (effective 1 April 2020) was substantively enacted on 6 September 2016. This will reduce the company's future current tax charge accordingly.
FROSTS GARDEN CENTRE LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 JULY 2018
(Continued)
- 20 -
The actual (credit)/charge for the year can be reconciled to the expected charge for the year based on the profit or loss and the standard rate of tax as follows:
2018
2017
£
£
Profit before taxation
376,416
2,118,398
Expected tax charge based on the standard rate of corporation tax in the UK of 19.00% (2017: 19.67%)
71,519
416,689
Tax effect of expenses that are not deductible in determining taxable profit
6,551
18,805
Tax effect of income not taxable in determining taxable profit
-
(391,440)
Group relief
(177,783)
(71,321)
Amortisation on assets not qualifying for tax allowances
11,544
11,948
Amount of deferred tax expense relating to timing difference
62,197
42,539
Taxation (credit)/charge for the year
(25,972)
27,220
10
Dividends
2018
2017
£
£
Interim paid
2,337,390
2,000,000
11
Intangible fixed assets
Goodwill
£
Cost
At 1 August 2017 and 31 July 2018
678,641
Amortisation and impairment
At 1 August 2017
425,376
Amortisation charged for the year
60,756
At 31 July 2018
486,132
Carrying amount
At 31 July 2018
192,509
At 31 July 2017
253,265
FROSTS GARDEN CENTRE LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 JULY 2018
- 21 -
12
Tangible fixed assets
Land and buildings freehold
Land and buildings leasehold
Plant and machinery
Fixtures and fittings
Motor vehicles
Total
£
£
£
£
£
£
Cost
At 1 August 2017
1,767,463
3,234,910
3,139,481
673,994
30,777
8,846,625
Additions
-
-
198,532
97,227
51,100
346,859
Disposals
-
-
(18,750)
-
-
(18,750)
At 31 July 2018
1,767,463
3,234,910
3,319,263
771,221
81,877
9,174,734
Depreciation and impairment
At 1 August 2017
997,537
1,952,930
1,919,155
522,462
13,168
5,405,252
Depreciation charged in the year
133,689
172,152
416,934
116,452
11,204
850,431
Eliminated in respect of disposals
-
-
(12,816)
-
-
(12,816)
At 31 July 2018
1,131,226
2,125,082
2,323,273
638,914
24,372
6,242,867
Carrying amount
At 31 July 2018
636,237
1,109,828
995,990
132,307
57,505
2,931,867
At 31 July 2017
769,926
1,281,980
1,220,326
151,532
17,609
3,441,373
FROSTS GARDEN CENTRE LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 JULY 2018
12
Tangible fixed assets
(Continued)
- 22 -
The net carrying value of tangible fixed assets includes the following in respect of assets held under finance leases or hire purchase contracts.
2018
2017
£
£
Plant and machinery
10,307
12,167
Motor vehicles
44,864
-
55,171
12,167
Depreciation charge for the year in respect of leased assets
12,816
5,840
13
Financial instruments
2018
2017
£
£
Carrying amount of financial assets
Debt instruments measured at amortised cost
112,627
246,380
Carrying amount of financial liabilities
Measured at amortised cost
4,183,633
2,183,924
14
Stocks
2018
2017
£
£
Finished goods and goods for resale
1,972,981
2,203,480
15
Debtors
2018
2017
Amounts falling due within one year:
£
£
Trade debtors
94,785
75,068
Other debtors
17,842
171,312
Prepayments and accrued income
746,456
609,389
859,083
855,769
FROSTS GARDEN CENTRE LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 JULY 2018
- 23 -
16
Creditors: amounts falling due within one year
2018
2017
Notes
£
£
Bank loans and overdrafts
18
260,112
-
Obligations under finance leases
19
24,783
6,797
Trade creditors
1,456,038
1,765,774
Amounts owed to group undertakings
49,890
-
Corporation tax
-
63,568
Other taxation and social security
828,658
502,916
Other creditors
28,466
75,264
Accruals and deferred income
293,489
328,846
2,941,436
2,743,165
A bank overdraft exists and is secured by way of an unlimited intercompany guarantee by Frosts Garden Centre Limited and Frosts Landscape Construction Limited, a fellow group undertaking until 31 July 2018. This guarantee was removed on 1 August 2018.
The bank overdraft was not in use at the year end.
A debenture is held in favour of National Westminster Bank Plc over all assets of the company issued on 21 September 2001. In addition, a legal charge is held on the freehold land and buildings, Buckden Road, Brampton.
17
Creditors: amounts falling due after more than one year
2018
2017
Notes
£
£
Bank loans and overdrafts
18
2,039,888
-
Obligations under finance leases
19
30,967
7,243
2,070,855
7,243
18
Loans and overdrafts
2018
2017
£
£
Bank loans
2,300,000
-
Payable within one year
260,112
-
Payable after one year
2,039,888
-
The long-term loans are secured by the existing fixed charges over all of the assets of the company and the legal charge held on the freehold land and buildings, Buckden Road, Brampton, dated September 2001.
FROSTS GARDEN CENTRE LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 JULY 2018
18
Loans and overdrafts
(Continued)
- 24 -
The loan, with National Westminster Bank Plc, is provided to Frosts Garden Centre Limited to on lend to FGC Holdings Ltd, the ultimate parent company. The loan is charged at 2% per annum over base rate, which at the year end was 0.5%. The loan matures on 31 July 2023, with repayments being made on a monthly basis at an equivalent rate of a 10 year loan. A final lump sum repayment is due on 31 July 2023 to clear the remaining balance.
19
Finance lease obligations
2018
2017
Future minimum lease payments due under finance leases:
£
£
Within one year
24,783
7,683
In two to five years
30,967
20,201
55,750
27,884
Finance lease payments represent rentals payable by the company for certain items of plant and machinery. All leases are on a fixed repayment basis and no arrangements have been entered into for contingent rental payments.
20
Provisions for liabilities
2018
2017
Notes
£
£
Deferred tax liabilities
21
33,130
59,104
21
Deferred taxation
Deferred tax assets and liabilities are offset where the company has a legally enforceable right to do so. The following is the analysis of the deferred tax balances (after offset) for financial reporting purposes:
Liabilities
Liabilities
2018
2017
Balances:
£
£
Accelerated capital allowances
36,389
63,050
Temporary timing differences
(3,259)
(3,946)
33,130
59,104
2018
Movements in the year:
£
Liability at 1 August 2017
59,104
Credit to profit or loss
(25,974)
Liability at 31 July 2018
33,130
FROSTS GARDEN CENTRE LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 JULY 2018
21
Deferred taxation
(Continued)
- 25 -
22
Retirement benefit schemes
2018
2017
Defined contribution schemes
£
£
Charge to profit or loss in respect of defined contribution schemes
94,301
80,525
The company operates a defined contribution pension scheme for all qualifying employees.
The assets of the scheme are held separately from those of the company in an independently administered fund.
23
Share capital
2018
2017
£
£
Ordinary share capital
Issued and fully paid
128,340 Ordinary shares of 10p each
12,834
12,834
24
Operating lease commitments
Lessee
At the reporting end date the company had outstanding commitments for future minimum lease payments under non-cancellable operating leases, which fall due as follows:
2018
2017
£
£
Within one year
635,094
635,094
Between two and five years
1,993,139
2,011,079
In over five years
1,504,522
1,921,676
4,132,755
4,567,849
Included within operating leases is an agreement for the rent of land over a term of 125 years. A break clause exists allowing a minimum of 2 years notice, therefore the commitment has been entered for a period of 2 years.
25
Capital commitments
Amounts contracted for but not provided in the financial statements:
2018
2017
£
£
Acquisition of tangible fixed assets
279,402
-
FROSTS GARDEN CENTRE LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 JULY 2018
- 26 -
26
Related party transactions
Remuneration of key management personnel
The remuneration of key management personnel is as follows.
2018
2017
£
£
Aggregate compensation
668,567
474,020
Under FRS102 33.6, key management personnel are those persons having authority and responsibility for planning, directing and controlling the activities of the entity, directly or indirectly, including any director of the entity.
Amounts paid to key management personnel include consultancy services paid to The Smithy Limited, a company that B Cook, director, owns a 50% stake in.
Transactions with related parties
During the year the company entered into the following transactions with related parties:
Sales
Purchases
2018
2017
2018
2017
£
£
£
£
Frosts Landscape Construction Limited
104,002
88,248
74,241
202,627
Willington Garden Centre
1,730,857
1,634,605
333,129
350,519
2018
2017
Amounts due to related parties
£
£
Frosts Landscape Construction Limited
-
4,852
2018
2017
Amounts due from related parties
£
£
Frosts Landscape Construction Limited
10,951
-
Willington Garden Centre
64,137
100,915
FROSTS GARDEN CENTRE LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 JULY 2018
26
Related party transactions
(Continued)
- 27 -
A relationship exists with Willington Garden Centre, a partnership in which some of the directors hold a combined 50% ownership stake.
An unlimited intercompany guarantee exists between the company and Frosts Landscape Construction Limited, a fellow group undertaking, whereby Frosts Garden Centre Limited acts as the guarantor.
During the year the company paid a dividend of £2,337,390 (2017: £2,000,000) to its parent company, Frosts Garden Centre Restructuring Limited.
At the balance sheet date the company was owed £nil (2017: £33) by S A Frost, £10 (2017: £nil) owed by J C Frost, and £969 owed to (2017: £3,913 owed by) J A Frost.
27
Controlling party
The company is wholly owned by Frosts Garden Centre Restructuring Limited, the parent company, incorporated in England and Wales. The ultimate parent company is FGC Holdings Limited, incorporated in England and Wales. The ultimate controlling parties are J A Frost and J C Frost directors and shareholders of the ultimate parent company, acting in concert.
28
Cash generated from operations
2018
2017
£
£
Profit for the year after tax
402,388
2,091,178
Adjustments for:
Taxation (credited)/charged
(25,972)
27,220
Finance costs
2,228
1,444
Gain on disposal of tangible fixed assets
-
(898)
Amortisation and impairment of intangible assets
60,756
60,756
Depreciation and impairment of tangible fixed assets
850,431
798,846
Gain on sale of investments
-
(1,990,466)
Movements in working capital:
Decrease in stocks
230,499
94,814
(Increase) in debtors
(7,260)
(1,572)
(Decrease) in creditors
(16,259)
(288,726)
Cash generated from operations
1,496,811
792,596
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J A Frost
J C Frost
R E Frost
S A Frost
R S Towers
B Cook
H S Frost
J M Tonge
S Friend
C Harper
C Roberts
J M Tonge
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