Registered number:
For the year ended
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Swallow Holdings Limited
Company Information
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Swallow Holdings Limited
Contents
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Swallow Holdings Limited
Group Strategic Report
For the year ended 30 September 2018
The directors present the group strategic report for the year ended 30 September 2018.
As shown in the consolidated statement of comprehensive income on page 9 the group’s turnover has increased by £0.3m (1%) from the prior year. The group returned a net profit before tax of £0.76m against £1.33m in the prior year, a decrease of 43%. Given the very challenging market conditions created by the cost of raw milk relative to the value of cream experienced by all liquid milk processors in this period we are pleased with the performance of the business.
The consolidated statement of financial position on page 10 shows that the group’s financial position at the year end in terms of net assets has improved from the prior year. The group has a strong base of owned and long leasehold commercial property from which it operates, positive net current assets and good liquidity. The group has invested significantly in its online retail trading platform for online selling and delivery of dairy, convenience and grocery products to residential customers in the North West, including a comprehensive website replacement and upgrade programme, and this remains a priority area for activity and investment for the future due to strong sales performance in this market segment. The group has continued to source the majority of its raw milk requirements from selected high quality farms in the North West, particularly in Cheshire. This strengthens our position as a high quality supplier of genuine local produce with strong links to our farmer suppliers. Principal risks and uncertainties Continued heavy discounting of milk by the major and minor multiple retailers to win custom may continue to lead to margin compression and loss of sales volume. The group will address this by remaining price competitive for a conveniently delivered product with strong local provenance and high quality, and appeal to those consumers who value these characteristics and are willing to pay for them, particularly through reaching a wider audience in Greater Manchester and Warrington with its online platform. We will make further investment in the online dairy and convenience goods delivery model which has yielded healthy sales growth for us during the financial year. We encourage customers of our traditional offline delivery service to switch to online where appropriate as it delivers enhanced customer interaction, service and cash collection benefits. We will also continue to invest in the marketing and roll out of our “Best of Local” product range sold via the online platform which comprises high quality butcher, baker, fishmonger, “recipes-to-go” and staple green grocer products. We have seen the online business engage a new customer demographic in our food offering over the milk, dairy and expanded grocery range. We are also investing generally in our IT infrastructure, software and staff training and awareness to constantly improve our productivity, financial control, cyber security and GDPR compliance. While we believe doorstep deliveries nationally have experienced net decline again this year, we have managed to enjoy stability in this market segment of our business during the period. We believe this is due to publicity in the media concerning the problems of single use plastic in the environment which has pushed consumers to look for solutions online which has greatly benefitted sales of glass bottled milk particularly via our online platform. Our strong local reputation and food provenance, extensive delivery network and well established glass bottle delivery system using reusable bottles with zero packaging waste is proving an attractive consumer proposition to these environmentally and tech aware but time poor customers. We also aim to retain and grow milk sales volumes in the wholesale, middle ground and contract packing segments which gives breadth and depth to our business model.
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Swallow Holdings Limited
Group Strategic Report (continued)
For the year ended 30 September 2018
Creditworthiness of our customers remains a risk. However, the group has a very diverse and well spread customer base who themselves are individuals or businesses with good cash flow characteristics and the group actively manages its debtors to keep risk exposure to acceptable levels and to follow up slow or non-payment. Relative to sales the group has experienced a low level of credit default in recent years.
The group’s revenues and costs derive entirely inside the UK (and principally the North West of England) so with the exception of the impact of world markets on the UK price of raw milk, cream, packaging materials and energy it is largely domestically focused. We have taken steps to analyse our dependencies to mitigate risk in the event of a “No deal Brexit” taking place in March 2019. Most of our suppliers are UK based and our principle raw material, farm milk, is locally produced. For those suppliers with international dependencies (mainly packaging providers) which might suffer disruption or delay to supply we have made contingencies for both the group and the supplier to hold additional buffer stocks through this period until any new realities are fully understood or adapted to. A baseline assumption has been made that the Government will continue to ensure that fuel, energy and other primary utilities and services are freely available as we have no control over the provision of these. As a “No deal Brexit” may have an impact on the supply and demand of raw milk and cream in the UK this effect will have to be passed on to consumers should it necessitate a rise in the price of finished milk products. A safe working and operating environment for all our staff, customers, contractors and suppliers is of the utmost importance to the board of directors and to that end they have put in place policies, procedures, management and systems to plan, analyse, monitor and act on all aspects of health and safety within the business from farm collections of milk, through to production, logistics and fleet management, customer deliveries and administration. The Board have appointed a suitably qualified Health & Safety Manager and personally supervise regular meetings with the management of the group who have responsibility for operational health and safety. The group also takes its corporate and social responsibility seriously. It is a member of the Dairy Energy Savings Scheme, has completed its ESOS assessments and will continue to invest in energy saving measures. We work with our packaging and other suppliers to find ways of reducing the amount of packaging materials used in our packing operations. Our poly bottle supplier uses a significant amount of recyclate in the bottles which are themselves fully recyclable through the normal council recycling system. Our widespread and growing use of washable reusable glass bottles and electric delivery vehicles means we have long led the way in sustainable food delivery systems and are benefitting from the trend towards reusable glass for milk. The group is also a generous charitable donor, on its own account, supporting charities involved in the improvement of the lives of young people in Manchester and its environs, and also through its customer lottery scheme which supports numerous worthy local charities such as Francis House Children’s Hospice and St Ann’s Hospice.
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Swallow Holdings Limited
Group Strategic Report (continued)
For the year ended 30 September 2018
The key financial performance indicators for the past five years are as follows:
This report was approved by the board
and signed on its behalf.
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Swallow Holdings Limited
Directors' Report
For the year ended 30 September 2018
The directors present their report and the financial statements for the year ended 30 September 2018.
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 judgements and accounting estimates that are reasonable and prudent;
∙
state whether applicable UK Accounting Standards have been followed, subject to any material departures disclosed and explained in the financial statements;
∙
prepare the financial statements on the going concern basis unless it is inappropriate to presume that the group 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 profit for the year, after taxation, amounted to £
606,598
(2017 -
£
1,117,665
)
.
Dividends paid during the year amounted to £500,000
(2017 - £600,000)
.
The directors do not recommend payment of a final dividend.
The directors who served during the year were:
Charitable donations During the year the company donated £22,100 (2017 - £20,970) to UK registered charities.
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Swallow Holdings Limited
Directors' Report (continued)
For the year ended 30 September 2018
The business remains well set to benefit from its diverse and solid customer base which yields regular repeat custom and its low cost, strategically well positioned and well invested manufacturing and distribution facilities in Manchester, Warrington and Kendal. We will continue to bid for profitable business using our available production and distribution capacity and in particular will invest in and market heavily to residential consumers our online grocery offering in the year ahead.
The directors consider the group to be in a strong financial position and plan to expand the group’s operations by organic growth and acquisition of further business if the opportunity presents itself in the future.
The group places considerable value on the involvement of its employees and has continued its existing practice of keeping them informed on matters affecting them as employees and on various matters affecting the performance of the group. In particular the group will involve employees in developing a strong health and safety culture by creating opportunities for them to easily communicate concerns and ideas about how to improve the group's performance in this area.
Each of the persons who are
directors at the time when this directors' report is approved has confirmed that:
There have been no significant events affecting the group since the year end.
The auditors, Hurst & Company Accountants 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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Swallow Holdings Limited
Independent Auditors' Report to the Shareholders of Swallow Holdings Limited
We have audited the financial statements of Swallow Holdings Limited (the 'parent company') and its subsidiaries (the 'group') for the year ended 30 September 2018, which comprise the group statement of comprehensive income, the group and company statements of financial position, the group statement of cash flows, the group and 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).
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 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.
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 group's or the parent 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 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.
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Swallow Holdings Limited
Independent Auditors' Report to the Shareholders of Swallow Holdings Limited (continued)
We have nothing to report in this regard.
In our opinion, based on the work undertaken in the course of the audit:
∙
the information given in the group strategic report and the directors' report for the financial year for which the financial statements are prepared is consistent with the financial statements; and
∙
the group strategic report and the directors' report have been prepared in accordance with applicable legal requirements.
In the light of the knowledge and understanding of the group and the parent company and its environment obtained in the course of the audit, we have not identified material misstatements in the group strategic report or the directors' report.
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 4, 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 group's and the parent company's ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the directors either intend to liquidate the group or the parent company or to cease operations, or have no realistic alternative but to do so.
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Swallow Holdings Limited
Independent Auditors' Report to the Shareholders of Swallow Holdings Limited (continued)
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditors' report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with ISAs (UK) will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these 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.
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
Lancashire Gate
21 Tiviot Dale
Stockport
Cheshire
SK1 1TD
21 May 2019
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Swallow Holdings Limited
Consolidated Statement of Comprehensive Income
For the year ended 30 September 2018
Page 9
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Swallow Holdings Limited
Registered number:
02979029
Consolidated Statement of Financial Position
As at
The financial statements were approved and authorised for issue by the board and were signed on its behalf by
:
The notes on pages 15 to 31 form part of these financial statements.
Page 10
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Swallow Holdings Limited
Registered number:
02979029
Company Statement of Financial Position
As at
The financial statements were approved and authorised for issue by the board and were signed on its behalf by
:
The notes on pages 15 to 31 form part of these financial statements.
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Swallow Holdings Limited
Consolidated Statement of Changes in Equity
For the year ended
30 September 2018
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Swallow Holdings Limited
Company Statement of Changes in Equity
For the year ended
30 September 2018
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Swallow Holdings Limited
Consolidated Statement of Cash Flows
For the year ended 30 September 2018
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Swallow Holdings Limited
Notes to the Financial Statements
For the year ended 30 September 2018
Swallow Holdings Limited is a private company limited by share capital, incorporated in England, registered number 02979029. The address of the registered office and principal place of business is Mellors Road, Trafford Park, Manchester, M17 1PB. The principal activity of the company is acting as a holding company.
2.
Accounting policies
The financial statements have been prepared under the historical cost convention 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 group management to exercise judgement 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 group 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.
Revenue is recognised to the extent that it is probable that the economic benefits will flow to the group 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:
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Swallow Holdings Limited
Notes to the Financial Statements
For the year ended 30 September 2018
2.
Accounting policies (continued)
Goodwill
Goodwill represents the difference between amounts paid on the cost of a business combination and the acquirer’s interest in the fair value of the group's share of its identifiable assets and liabilities of the acquiree at the date of acquisition. Subsequent to initial recognition, Goodwill is measured at cost less accumulated amortisation and accumulated impairment losses. Goodwill is amortised on a straight line basis to the consolidated statement of comprehensive income over its useful economic life. Other intangible assets Intangible assets are initially recognised at cost. After recognition, under the cost model, intangible assets are measured at cost less any accumulated amortisation and any accumulated impairment losses.
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 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 the consolidated statement of comprehensive income.
Investments in subsidiaries are measured at cost less accumulated impairment.
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 out basis. Finished goods include labour and attributable overheads.
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Swallow Holdings Limited
Notes to the Financial Statements
For the year ended 30 September 2018
2.
Accounting policies (continued)
The group only enters into basic financial instruments 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.
Debt instruments (other than those wholly repayable or receivable within one year), including loans and other accounts receivable and payable, are initially measured at present value of the future cash flows and subsequently at amortised cost using the effective interest method. Debt instruments that are payable or receivable within one year, typically trade debtors and creditors, are measured, initially and subsequently, at the undiscounted amount of the cash or other consideration expected to be paid or received. 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, which is an approximation of the amount that the group would receive for the asset if it were to be sold at the reporting date. Financial assets and liabilities are offset and the net amount reported in the statement of financial position when there is an 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.
Expenditure relating to the development of software used within the business is capitalised as an intangible fixed asset and amortised on a straight line basis over the estimated useful life. Associated sundry costs are recognised in profit or loss in the period they are incurred.
Rentals paid under operating leases are charged to the consolidated statement of comprehensive income on a straight line basis over the lease term.
Benefits received and receivable as an incentive to sign an operating lease are recognised on a straight line basis over the lease term, unless another systematic basis is representative of the time pattern of the lessee's benefit from the use of the leased asset.
Assets obtained under hire purchase contracts and finance leases are capitalised as tangible fixed assets. Assets acquired by finance lease are depreciated over the shorter of the lease term and their useful lives. Assets acquired by hire purchase are depreciated over their useful lives. Finance leases are those where substantially all of the benefits and risks of ownership are assumed by the company. Obligations under such agreements are included in creditors net of the finance charge allocated to future periods. The finance element of the rental payment is charged to the consolidated statement of comprehensive income so as to produce a constant periodic rate of charge on the net obligation outstanding in each period.
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Swallow Holdings Limited
Notes to the Financial Statements
For the year ended 30 September 2018
2.
Accounting policies (continued)
Defined contribution pension plan
The group operates a defined contribution plan for its employees. A defined contribution plan is a pension plan under which the group pays fixed contributions into a separate entity. Once the contributions have been paid the group has no further payment obligations.
The contributions are recognised as an expense in the consolidated statement of comprehensive income when they fall due. Amounts not paid are shown in accruals as a liability in the statement of financial position. The assets of the plan are held separately from the group in independently administered funds.
Deferred tax balances are recognised in respect of all timing differences that have originated but not reversed by the statement of financial position 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 reporting date.
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Swallow Holdings Limited
Notes to the Financial Statements
For the year ended 30 September 2018
Preparation of the financial statements requires management to make significant judgements and estimates that affect amounts recognised for assets and liabilities at the reporting date and the amounts of revenue and expenses incurred during the reporting period. Actual outcomes may differ from these judgements, estimates and assumptions. The judgements, estimates and assumptions that have the most significant effect on the carrying value of assets and liabilities of the group as at 30 September 2018 are discussed below.
Recoverable value of trade debtors The group has recognised trade debtors with a carrying value of £2,620,677. The recoverability of trade debtors is regularly reviewed in the light of the available economic information specific to each debtor and specific provisions are recognised for balances considered to be at risk or irrecoverable. Tangible fixed assets The management of the group exercises judgement in estimating the useful life of property, plant and equipment. Value of goodwill Goodwill is assessed for impairment at each reporting date. Management exercises judgement to assess the value of goodwill.
All turnover arose from the group's principal activity wholly undertaken in the UK.
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Swallow Holdings Limited
Notes to the Financial Statements
For the year ended 30 September 2018
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Swallow Holdings Limited
Notes to the Financial Statements
For the year ended 30 September 2018
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Swallow Holdings Limited
Notes to the Financial Statements
For the year ended 30 September 2018
12.
Taxation (continued)
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Swallow Holdings Limited
Notes to the Financial Statements
For the year ended 30 September 2018
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Swallow Holdings Limited
Notes to the Financial Statements
For the year ended 30 September 2018
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Swallow Holdings Limited
Notes to the Financial Statements
For the year ended 30 September 2018
15.
Tangible fixed assets (continued)
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Swallow Holdings Limited
Notes to the Financial Statements
For the year ended 30 September 2018
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Swallow Holdings Limited
Notes to the Financial Statements
For the year ended 30 September 2018
18.
Debtors (continued)
Secured loans
Bank loans and overdrafts are secured by a debenture and a fixed and floating charge over the assets of the group. Net obligations under hire purchase contracts are secured against the assets to which they relate.
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Swallow Holdings Limited
Notes to the Financial Statements
For the year ended 30 September 2018
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Swallow Holdings Limited
Notes to the Financial Statements
For the year ended 30 September 2018
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Swallow Holdings Limited
Notes to the Financial Statements
For the year ended 30 September 2018
Profit and loss account
Comprises all current and prior period retained profits and losses.
Included within retained earnings are non-distributable reserves of £1,387,719 (2017 - £1,485,679) in respect of revaluations of land and buildings, net of depreciation recognised in the profit and loss account in excess of depreciation applicable under the historical cost convention and associated deferred tax liabilities.
The group operates a defined contributions pension scheme. The assets of the scheme are held separately from those of the group in an independently administered fund. The pension cost charge represents contributions payable by the group to the fund and amounted to £113,882
(2017 - £159,705)
. Contributions totalling £11,724
(2017 - £16,060)
were payable to the fund at the balance sheet date and are included in creditors.
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Swallow Holdings Limited
Notes to the Financial Statements
For the year ended 30 September 2018
32.
Subsidiary undertaking
The following was a subsidiary undertaking of the company:
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