Registered number:
FOR THE YEAR ENDED 31 DECEMBER 2019
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EAST COAST NURSERY LIMITED
COMPANY INFORMATION
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EAST COAST NURSERY LIMITED
CONTENTS
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EAST COAST NURSERY LIMITED
STRATEGIC REPORT
FOR THE YEAR ENDED 31 DECEMBER 2019
2019 was a very difficult trading year for the Company whereby we saw massive reductions in sales with the full impact of the closure of the Toys R Us Store’s on our turnover during a time that the protracted Brexit negotiations were continuing to cause lack of confidence in the market place.
At the same time Kiddiecare declined under the Dunelm brand, whilst our largest customer Mothercare ran into difficulties and although we continued to support them, albeit restricting our supply to reduce our risk regretfully this culminated in a very substantial bad debt adding to our losses for the year of £610k (2018: £221k profit). Despite the losses incurred and redundancy payments made we retain a strong balance sheet of just under £1.3m. We continued our restructuring and rationalising activities, which had been started in previous years closing our satellite offices, disposing of a number of machines to rationalise our product ranges, ceasing with licences and reducing the numbers of our staff in both non-productive and production significantly, which did incur substantial redundancy costs in the short term. Further cost savings were made with a pay freeze implemented for all senior staff, a rental holiday in the last quarter of 2019 as well as in 2020, and no dividends were paid. Despite these actions, administrative expenses increased over the period as a result of the Mothercare bad debt. It is very pleasing that we have traded well in 2020 with more sales moving online to be profitable and with the support of the Government furlough scheme. With strengthened financial performance since the year end, annual bank overdraft facilities were renewed as usual to March 2021 and the directors anticipate that these facilities will continue when due. The Company has determined that the effects of the spread of Covid-19 are non-adjusting subsequent events. Accordingly, the financial position and results of operations as of and for the year ended 31 December 2019 have not been adjusted to reflect their impact as it is not possible to reliably estimate the duration and severity of these consequences, as well as their impact on the financial position and results of the Company for future periods.
A decline in retail business, although we are taking steps to concentrate on our brands of East Coast to drive online sales.
The directors manage exchange rate risk by utilising currency forward contracts where necessary. The Brexit deal could have a significant impact on the Company, as the outcome could result in tariffs being imposed on goods both into and out of the UK. The directors do not consider that the COVID-19 pandemic impacts demand for nursery products which are necessary for parents. However enforced reduced footfall on the high street leads to increasing numbers of consumers choosing to shop online. The directors have acted to manage this risk by selling more products on the web, including directly to consumers.
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EAST COAST NURSERY LIMITED
STRATEGIC REPORT (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2019
The key performance indicators used are as follows:
Turnover £8.75m (2018: £10.83m) Gross Profit 13.3% (2018: 11.5%) US Dollar Purchasing 1.282 (2018: 1.347) Turnover shows the rate of decline in demand for the Company’s products. Gross profit indicates any significant cost increases which the Company is unable to pass on to its’ customers. Forex purchasing costs are critical, since if not monitored and managed erodes the gross margin. I would like to thank directors, management and staff for their co-operation and support during these challenging times and overall we are very optimistic for the future.
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EAST COAST NURSERY LIMITED
DIRECTORS' REPORT
FOR THE YEAR ENDED 31 DECEMBER 2019
The directors present their report and the financial statements for the year ended 31 December 2019.
The directors are responsible for preparing the Strategic Report, the Directors' 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 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 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 for the Company's financial statements and then apply them consistently;
∙
make judgments and accounting estimates that are reasonable and prudent;
∙
prepare the financial statements on the going concern basis unless it is inappropriate to presume that the 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 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 hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.
The loss for the year, after taxation, amounted to £
610,484
(2018 -
profit
£
220,513
)
.
The directors who served during the year were:
We continue to develop our range of branded products to increase our sales in the UK and expand internationally. Whilst the action we have taken has helped improve profitability, trading is still challenging due to the effect of Brexit on the value of sterling.
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EAST COAST NURSERY LIMITED
DIRECTORS' REPORT (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2019
Each of the persons who are
directors at the time when this Directors' Report is approved has confirmed that:
The auditors, Price Bailey LLP, will be proposed for reappointment in accordance with
section 485 of the Companies Act 2006.
This report was approved by the board on
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EAST COAST NURSERY LIMITED
INDEPENDENT AUDITORS' REPORT TO THE MEMBERS OF EAST COAST NURSERY LIMITED
We have audited the financial statements of East Coast Nursery Limited (the 'Company') for the year ended 31 December 2019, which comprise the Statement of Comprehensive Income, the Balance Sheet, the 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).
In our opinion the financial statements:
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 Company 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.
We draw attention to note 2.3 in the financial statements, which indicates that current economic conditions driving significant downturn in the high street market may cast significant doubt on the Company's ability to continue as a going concern. As stated in note 2.3, these events or conditions, along with the other matters as set forth in note 2.3, indicate that a material uncertainty exists that may cast significant doubt on the Company's ability to continue as a going concern. Our opinion is not modified in respect of this matter.
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 Auditors' 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.
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EAST COAST NURSERY LIMITED
INDEPENDENT AUDITORS' REPORT TO THE MEMBERS OF EAST COAST NURSERY LIMITED (CONTINUED)
In our opinion, based on the work undertaken in the course of the audit:
∙
the information given in the Strategic Report and the Directors' Report for the financial year for which the financial statements are prepared is consistent with the financial statements; and
∙
the Strategic Report and the Directors' Report have been prepared in accordance with applicable legal requirements.
In the light of the knowledge and understanding of the Company and its environment obtained in the course of the audit, we have not identified material misstatements in the Strategic Report or the Directors' Report.
We have nothing to report in respect of the following matters in relation to which the Companies Act 2006 requires us to report to you if, in our opinion:
As explained more fully in the Directors' Responsibilities Statement on page 3, 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.
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 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:
www.frc.org.uk/auditorsresponsibilities
. This description forms part of our Auditors' Report.
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EAST COAST NURSERY LIMITED
INDEPENDENT AUDITORS' REPORT TO THE MEMBERS OF EAST COAST NURSERY LIMITED (CONTINUED)
This report is made solely to the Company's members
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 for our audit work, for this report, or for the opinions we have formed.
for and on behalf of
Chartered Accountants
Statutory Auditors
Anglia House, 6 Central Avenue
St Andrews Business Park
Thorpe St Andrew
Norfolk
NR7 0HR
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EAST COAST NURSERY LIMITED
STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEAR ENDED 31 DECEMBER 2019
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EAST COAST NURSERY LIMITED
REGISTERED NUMBER:
02141745
BALANCE SHEET
AS AT
31 DECEMBER 2019
The financial statements were approved and authorised for issue by the board and were signed on its behalf on
The notes on pages 11 to 25 form part of these financial statements.
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EAST COAST NURSERY LIMITED
STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED
31 DECEMBER 2019
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EAST COAST NURSERY LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2019
East Coast Nursery Limited is a private company limited by shares, incorporated in the UK and registered at Robertson House, Laundry Loke, North Walsham, Norfolk, NR28 0BX.
The principal activity of the company is the import and retail of nursery products.
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
.
The preparation of financial statements in compliance with FRS 102 requires the use of certain critical accounting estimates. It also requires management to exercise judgment in applying the Company's accounting policies (see note 3).
The financial statements are presented in sterling and rounded to the nearest £.
The following principal accounting policies have been applied:
The company has taken advantage of the following disclosure exemptions in preparing these financial statements, as permitted by the FRS 102 "The Financial Reporting Standard applicable in the UK and Republic of Ireland":
∙
the requirements of Section 7 Statement of Cash Flows;
∙
the requirements of Section 3 Financial Statement Presentation paragraph 3.17(d).
This information is included in the consolidated financial statements of The East Coast Group Limited as at 31 December 2019 and these financial statements may be obtained from the company's registered office.
The financial statements have been prepared on the going concern basis which the directors consider to be appropriate. The onset of the global COVID-19 pandemic since December 2019 combined with other economic conditions are driving a significant downturn in high street activity, which cast material uncertainty over the Company''s ability to continue as a going concern. The consequences of the COVID-19 pandemic in the UK since April 2020 have not affected the supply and demand for the Company’s products and the Company has continued to operate, albeit with fewer productive staff. The current economic conditions affected by Brexit continue to create uncertainty on both the market and exchange rates which impacts the Company.
The directors considered profit and loss and cash flow forecasts for a period of at least 12 months from the date of approval of these financial statements and consider that, taking account of reasonably possible downsides, the Company will have sufficient funds to continue to meet its liabilities as they fall due. The Group currently meet its day-to-day working capital requirements through its bank facilities which have been renewed until 31 March 2021, and the directors expect that this will be extended for a further year, as usual. The most recent management information shows that the Company has returned to profitability since the year end.
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EAST COAST NURSERY LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2019
2.
Accounting policies (continued)
Functional and presentation currency
The Company's functional and presentational currency is GBP.
Transactions and balances
Foreign currency transactions are translated into the functional currency using the spot exchange rates at the dates of the transactions.
At each period end foreign currency monetary items are translated using the closing rate. Non-monetary items measured at historical cost are translated using the exchange rate at the date of the transaction and non-monetary items measured at fair value are measured using the exchange rate when fair value was determined.
Foreign exchange gains and losses resulting from the settlement of transactions and from the translation at period-end exchange rates of monetary assets and liabilities denominated in foreign currencies are recognised in profit or loss except when deferred in other comprehensive income as qualifying cash flow hedges.
Revenue is recognised to the extent that it is probable that the economic benefits will flow to the Company and the revenue can be reliably measured. Revenue is measured as the fair value of the consideration received or receivable, excluding discounts, rebates, value added tax and other sales taxes. The following criteria must also be met before revenue is recognised:
Sale of goods
Revenue from the sale of goods is recognised when all of the following conditions are satisfied:
These are satisfied at the point when goods are delivered to customers.
Rentals paid under operating leases are charged to profit or loss on a straight line basis over the lease term.
Finance costs are charged to profit or loss over the term of the debt using the effective interest method so that the amount charged is at a constant rate on the carrying amount. Issue costs are initially recognised as a reduction in the proceeds of the associated capital instrument.
All borrowing costs are recognised in profit or loss in the year in which they are incurred.
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EAST COAST NURSERY LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2019
2.
Accounting policies (continued)
Deferred tax balances are recognised in respect of all timing differences that have originated but not reversed by the Balance Sheet date, except that:
Deferred tax balances are not recognised in respect of permanent differences except in respect of business combinations, when deferred tax is recognised on the differences between the fair values of assets acquired and the future tax deductions available for them and the differences between the fair values of liabilities acquired and the amount that will be assessed for tax. Deferred tax is determined using tax rates and laws that have been enacted or substantively enacted by the balance sheet date.
Exceptional items are transactions that fall within the ordinary activities of the Company but are presented separately due to their size or incidence.
Depreciation 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 on the following basis:
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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EAST COAST NURSERY LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2019
2.
Accounting policies (continued)
Stocks are stated at the lower of cost and net realisable value, being the estimated selling price less costs to complete and sell. Cost is based on the cost of purchase on a first in, first outbasis. Work in progress and finished goods include labour and attributable overheads.
At each balance sheet date, stocks are assessed for impairment. If stock is impaired, the carrying amount is reduced to its selling price less costs to complete and sell. The impairment loss is recognised immediately in profit or loss.
Short term debtors are measured at transaction price, less any impairment. Loans receivable are measured initially at fair value, net of transaction costs, and are measured subsequently at amortised cost using the effective interest method, less any impairment.
Cash is represented by cash in hand and deposits with financial institutions repayable without penalty on notice of not more than 24 hours. Cash equivalents are highly liquid investments that mature in no more than three months from the date of acquisition and that are readily convertible to known amounts of cash with insignificant risk of change in value.
Short term creditors are measured at the transaction price. Other financial liabilities, including bank loans, are measured initially at fair value, net of transaction costs, and are measured subsequently at amortised cost using the effective interest method.
Provisions are made where an event has taken place that gives the Company a legal or constructive obligation that probably requires settlement by a transfer of economic benefit, and a reliable estimate can be made of the amount of the obligation.
Provisions are charged as an expense to profit or loss in the year that the Company becomes aware of the obligation, and are measured at the best estimate at the Balance Sheet date of the expenditure required to settle the obligation, taking into account relevant risks and uncertainties. When payments are eventually made, they are charged to the provision carried in the Balance Sheet.
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EAST COAST NURSERY LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2019
2.
Accounting policies (continued)
Financial assets that are measured at cost and amortised cost are assessed at the end of each reporting period for objective evidence of impairment. If objective evidence of impairment is found, an impairment loss is recognised in the Statement of Comprehensive Income.
For financial assets measured at cost less impairment, the impairment loss is measured as the difference between an asset's carrying amount and best estimate of the recoverable amount, which is an approximation of the amount that the Company would receive for the asset if it were to be sold at the balance sheet date.
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 subsequently re-measured at their fair value. Changes in the fair value of derivatives are recognised in profit or loss in finance costs or income as appropriate. The company does not currently apply hedge accounting for interest rate and foreign exchange derivatives.
The preparation of the financial statements requires management to make judgements, estimates and assumptions that affect the amounts reported for assets and liabilities as at the balance sheet date, and the amounts reported for income and expenditure during the year. However, the nature of estimation means that actual outcomes could differ from those estimates. No judgements (apart from those involving estimates) have been made when preparing the financial statements.
The key assumptions concerning the future and other key sources of estimation uncertainty at the reporting date that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year include: Provision for obsolete stock The Company reviews its stock on a regular basis and, where appropriate, makes provision for slow moving or obsolete stock. Estimation uncertainty arises in evaluating the likely recoverable amount of inventory held for extended periods. Impairment of debtors The Company reviews its debtor recoverability regularly and will provide against those debtors where they have doubt over collection.
Analysis of turnover by country of destination:
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EAST COAST NURSERY LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2019
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EAST COAST NURSERY LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2019
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EAST COAST NURSERY LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2019
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EAST COAST NURSERY LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2019
10.
Taxation (continued)
There were no factors that may affect future tax charges.
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EAST COAST NURSERY LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2019
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EAST COAST NURSERY LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2019
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EAST COAST NURSERY LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2019
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EAST COAST NURSERY LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2019
Revenue and cost of sales in the prior year have both reduced by £164,932. This has arisen as retro rebates were incorrectly included in cost of sales rather than being offset against revenue in the prior year.
The company has given an unlimited guarantee to Lloyds Bank Plc, secured by fixed and floating charges over the company's assets in respect of the borrowings of East Coast Nursery Limited, East Coast Plastics Limited and Bebecar UK Limited. At 31 December 2019 the net indebtedness of Bebecar UK Limited amounted to £(16,391) (2018: £28,889) and East Coast Plastics Limited amounted to £119,110 (2018: £166,841).
The group operates defined contribution pension schemes which are open to all staff. The schemes are administered by companies that are independent of the group's finances. The company's contributions are charged to the profit and loss account in the year in which they are made. The pension charge for the year was £89,359 (2018: £52,651). Contributions totalling £3,781 (2018: £2,943) were outstanding at the year end.
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EAST COAST NURSERY LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2019
The company has determined that these events are non-adjusting subsequent events. Accordingly, the financial position and results of operations as of and for the year ended 31 December 2019 have not been adjusted to reflect their impact. The duration and impact of the COVID-19 pandemic, as well as the effectiveness of government and central bank responses, remains unclear at this time. It is not possible to reliably estimate the duration and severity of these consequences, as well as their impact on the financial position and results of the company for future periods.
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EAST COAST NURSERY LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2019
The ultimate parent company is The East Coast Group Limited, a company which is incorporated and registered in England and Wales.
The largest group in which the results of the company are consolidated is that headed by The East Coast Group Limited. No other group financial statements include the results of the company. A copy of the financial statements of The East Coast Group Limited can be obtained from Companies House where they are filed. The ultimate controlling party of the company is Mr E G White by virtue of his 81% interest in the issued share capital of The East Coast Group Limited.
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