Company registration number 05202816 (England and Wales)
GARDENING EXPRESS LIMITED
ANNUAL REPORT AND FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2021
GARDENING EXPRESS LIMITED
COMPANY INFORMATION
Director
Mr C D Bonnett
Company number
05202816
Registered office
1386 London Road
Leigh on Sea
Essex
England
SS9 2UJ
Auditor
Francis James & Partners LLP
1386 London Road
Leigh on Sea
Essex
England
SS9 2UJ
GARDENING EXPRESS LIMITED
CONTENTS
Page
Strategic report
1 - 2
Director's report
3 - 4
Director's responsibilities statement
5
Independent auditor's report
6 - 9
Profit and loss account
10
Statement of comprehensive income
11
Balance sheet
12
Statement of changes in equity
13
Statement of cash flows
14
Notes to the financial statements
15 - 26
GARDENING EXPRESS LIMITED
STRATEGIC REPORT
FOR THE YEAR ENDED 31 DECEMBER 2021
- 1 -
The director presents the strategic report for the year ended 31 December 2021.
Fair review of the business
The director is pleased to report that the turnover of the company for the year was only 6% less than the previous year.
It was acknowledged by the director that the exceptional growth in turnover experienced during the year to 31 December 2020, was driven by the good weather and the closure of traditional Garden Centre's due to the Covid 19 lockdown rules, imposed by the government during the spring of 2020.
The turnover for the year ended 31 December 2021 is a 250% improvement on the turnover for the year ended 31 December 2019, the last reporting year prior to the pandemic.
Despite the small drop in turnover and increased costs, the company has maintained a healthy level of profitability.
Principal risks and uncertainties
The principal risks and uncertainties that effect the company are as follows;
The weather is a key contributing factor in the sales performance of the company. This is especially true during the busy spring period. If the weather is good during the early part of the spring season, then this traditionally drives higher sales throughout the rest of this period. Given that the company's main product mix, is for garden plants, which are traditionally purchased during this part of the year, the weather conditions can either increase or suppress the sales volumes.
The reputation of the company as a trusted supplier of goods to the general public is also a potential risk. The company endeavors to ensure that the customer experience is as positive as possible. It has also invested heavily in its customer service department to ensure that any queries or complaints are dealt with as quickly and efficiently as possible. This often involves the educating the company's customers in how plants grow and develop over the various seasons during the year. To this effect the company is working with specialist web-site designers to increase the knowledge content of its web-site. Given the large product range offered by the company, this process is likely to be a medium term project, but it is expected to provide long term benefits to both the customer and the company.
Key performance indicators
The key financial performance indicators for the company are its turnover, gross profit percentage, the proportion of the turnover spent on labour costs and the proportion of turnover spent on internet advertising.
As a retail business the turnover of the company is important to drive the rest of the business. Despite this the company has a policy of not pushing for turnover purely to maintain a high level of sales. The company will only sell products on which it can either make a reasonable gross profit margin, or to encourage customers to increase the overall spend in their shopping basket. During the year the turnover dropped slightly from the previous year. This was expected due to the unusual spike in turnover during the Spring of 2020. The company is continuing to monitor its turnover to ensure that it remains sustainable and where possible is driven by returning customers.
The gross profit percentage is an important indicator as it ensures that the sales the company makes are being made at a reasonable margin in order to fund for the overheads and retained earnings of the business. During the year the gross profit in respect of the purchase cost of the good sold remained within the desired parameters.
The percentage of turnover spent on labour costs is an important financial indicator as the cost of labour is a large proportion of the expenses of the business. As is similar to all horticultural businesses the labour input is used not only the processing of the current orders, and the care of fast moving stock, but also the growing of crops for future sale. During the year the labour costs as a percentage of turnover increased slightly. This was be due to the small decrease in turnover, which allowed that the labour force to spend more time on growing future crops.
The other main key financial performance indicator is the cost of the internet advertising as a percentage of turnover. This is important as it is a monitor of the effectiveness of the internet based advertising campaigns on driving turnover. During the year the company experienced an increase in this percentage. This was due to the higher prices being charged by the internet based advertisers and search engines. The company has further developed its plans to reduce its reliance on this method of driving sales volumes, by developing the knowledge base within its own websites. The company will then be able to increase its organic customer capture program, thereby reducing the cost of the advertising in order to maintain or increase the turnover.
GARDENING EXPRESS LIMITED
STRATEGIC REPORT (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2021
- 2 -
Other performance indicators
Being an internet based company the company carefully monitors various web based statistics.
It monitors the web traffic to its sites together with the sources of these visits and the effectiveness of any advertising or social media campaigns.
The company also monitors the size of its GDPR compliant database this provides an important indication of the level of regular and engaged customers.
Mr C D Bonnett
Director
30 September 2022
GARDENING EXPRESS LIMITED
DIRECTOR'S REPORT
FOR THE YEAR ENDED 31 DECEMBER 2021
- 3 -
The director presents his annual report and financial statements for the year ended 31 December 2021.
Principal activities
The principal activity of the company continued to be that of
the sale of plants via an internet based mail order system.
Results and dividends
The profit for the year has been included in these Accounts of £216,171 (2020: profit of £1,185,411).
No ordinary dividends were paid. The director does not recommend payment of a final dividend.
Director
The director who held office during the year and up to the date of signature of the financial statements was as follows:
Mr C D Bonnett
Financial instruments
The company has maintained its traditional approach to financing its activities using only bank borrowings when necessary. During the year the company refinanced its operations using a Corona Virus Business Interruption loan. This provided additional working capital to invest in stock for the 2022 season. The director will monitor this facility and other available to it in order to ensure it remain the most suitable product for the company.
The company continues to maintain its low risk approach to funding its asset, stock purchases and working capital requirements. The company continue to use traditional bank finance wherever possible. The company will also continue in its policy of reinvesting any surplus funds in its operations.
Future developments
The company has continued its work on various projects to enhance its profile in the gardening market place.
During 2021 the company sourced as supply of garden furniture to enhance its product ranges. This is expected to be a slow growing sector of the market for the company. At present the customer base will perceive the company as being a "plant only" supplier. To this effect the company will gradually increase its profile in this new sector of the market to it.
The company has also been working on its own brand of compost and garden tools. The own brand compost is now being sold to its customers. The garden tools are in development and expected to be available in the 2023 season.
As part of the company's plan to enhance its standing in the gardening sector it has been been developing its own garden based magazine. The launch issue was published in the Spring of 2022 and has been sent to a sample of the company's customer base to obtain feedback for the future development of the magazine. If the initial print run and circulation of 80,000 is maintained the magazine will be in the top 5 gardening based magazines in the UK by circulation.
Auditor
The auditor, Francis James & Partners LLP, 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.
GARDENING EXPRESS LIMITED
DIRECTOR'S REPORT (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2021
- 4 -
On behalf of the board
Mr C D Bonnett
Director
30 September 2022
GARDENING EXPRESS LIMITED
DIRECTOR'S RESPONSIBILITIES STATEMENT
FOR THE YEAR ENDED 31 DECEMBER 2021
- 5 -
The director is responsible for preparing the annual report and the financial statements in accordance with applicable law and regulations.
Company law requires the director to prepare financial statements for each financial year. Under that law the director has 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 director must not approve the financial statements unless he is 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 director is 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 director is 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. He is 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.
GARDENING EXPRESS LIMITED
INDEPENDENT AUDITOR'S REPORT
TO THE MEMBERS OF GARDENING EXPRESS LIMITED
- 6 -
Opinion
We have audited the financial statements of Gardening Express Limited (the 'company') for the year ended 31 December 2021 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 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:
-
give a true and fair view of the state of the company's affairs as at 31 December 2021 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
In auditing the financial statements, we have concluded that the director's use of the going concern basis of accounting in the preparation of the financial statements is appropriate.
Based on the work we have performed, we have not identified any material uncertainties relating to events or conditions that, individually or collectively, may cast significant doubt on the company's ability to continue as a going concern for a period of at least twelve months from when the financial statements are authorised for issue.
Our responsibilities and the responsibilities of the director with respect to going concern are described in the relevant sections of this report.
The other information comprises the information included in the annual report other than the financial statements and our auditor's report thereon. The director is responsible for the other information contained within the annual report. Our opinion on the financial statements does not cover the other information and, except to the extent otherwise explicitly stated in our report, we do not express any form of assurance conclusion thereon. Our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the course of the audit, or otherwise appears to be materially misstated. If we identify such material inconsistencies or apparent material misstatements, we are required to determine whether this gives rise to a material misstatement in the financial statements themselves. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact.
We have nothing to report in this regard.
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 director's
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 director's report have been prepared in accordance with applicable legal requirements.
GARDENING EXPRESS LIMITED
INDEPENDENT AUDITOR'S REPORT (CONTINUED)
TO THE MEMBERS OF GARDENING EXPRESS LIMITED
- 7 -
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 or the director's
r
eport
.
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:
-
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
remuneration specified by law are not made; or
-
we have not received all the information and explanations we require for our audit.
Responsibilities of director
As explained more fully in the director's
r
esponsibilities
s
tatement, the director is 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 director determines 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
director is
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 director either intends to liquidate the company or to cease operations, or has
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
.
The extent to which our procedures are capable of detecting irregularities, including fraud, is detailed below
.
- The nature of the industry and sector, control environment and business performance including the design of the company's policies, key drivers for directors remuneration;
- results of our enquiries of management, internal audit and the Audit & Risk Committee about their own identification and assessment of the risks of irregularities;
- any matters we identified having obtained and reviewed the company's documentation of their policies and procedures relating to:
- identifying, evaluating and complying with laws and regulations and whether they were aware of any instances of noncompliance;
- detecting and responding to the risks of fraud and whether they have knowledge of any actual, suspected or alleged fraud;
- the internal controls established to mitigate risks of fraud or non-compliance with laws and regulations;
The matters discussed among the audit engagement team including significant component audit teams and involving relevant internal specialists, regarding how and where fraud might occur in the financial statements and any potential indicators of fraud.
As a result of these procedures, we considered the opportunities and incentives that may exist within the organisation for fraud. In common with all audits under ISAs (UK), we are also required to perform specific procedures to respond to the risk of management override.
We also obtained an understanding of the legal and regulatory frameworks that the company operates in, focusing on provisions of those laws and regulations that had a direct effect on the determination of material amounts and disclosures in the financial statements.
In addition, we considered provisions of other laws and regulations that do not have a direct effect on the financial statements but compliance with which may be fundamental to the company's ability to operate or to avoid a material penalty.
GARDENING EXPRESS LIMITED
INDEPENDENT AUDITOR'S REPORT (CONTINUED)
TO THE MEMBERS OF GARDENING EXPRESS LIMITED
- 8 -
Our procedures to respond to risks identified included the following:
- reviewing the financial statement disclosures and testing to supporting documentation to assess compliance with provisions of relevant laws and regulations described as having a direct effect on the financial statements;
- enquiring of management, the Audit & Risk Committee in-house and external legal counsel concerning actual and potential litigation and claims;
- performing analytical procedures to identify any unusual or unexpected relationships that may indicate risks of material misstatement due to fraud;
- reading minutes of meetings of those charged with governance and
- in addressing the risk of fraud through management override of controls, testing the appropriateness of journal entries and other adjustments; assessing whether the judgements made in making accounting estimates are indicative of a potential bias; and evaluating the rationale of any significant transactions that are unusual or outside the normal course of operations.
We also communicated relevant identified laws and regulations and potential fraud risks to all engagement team members, and remained alert to any indications of fraud or noncompliance with laws and regulations throughout the audit.
A further description of our responsibilities is available on the Financial Reporting Council’s website at: https://www.frc.org.uk/auditorsresponsibilities. This description forms part of our auditor's report.
Key audit matters which we are required to address
Key audit matters are those matters that, in our professional judgement, were of most significance in our audit of the financial statements. Key audit matters are not intended to represent all matters that were discussed with them. Our audit procedures relating to these matters were designed in the context of our audit of the financial statements as a whole. Our opinion on the financial statements is not modified with respect to any of the key audit matters described below, and we do not express an opinion on these individual matters.
Closing stock
We were unable to attend a year end stock take for the company, as the company was in the process of restructuring its stock control systems around the year end and was therefore not able to provide us with the assistance required to be able to conduct the necessary testing on stock items held.
Subsequent to the year end we have attended the company’s premises to test the quantities of physical stock held at that date. These tests proved satisfactory.
As referred to in the Accounting Polices, most of the stock held by the company consists of growing crops and therefore the normal cost basis of stock valuation is not appropriate to many of the company’s lines of stock.
In this regard, we have not been able to verify the cost of all stocks held in the normal manner. However, we have been able to carry out alternative tests to satisfy ourselves as to the overall value of stock held at the year end.
GARDENING EXPRESS LIMITED
INDEPENDENT AUDITOR'S REPORT (CONTINUED)
TO THE MEMBERS OF GARDENING EXPRESS LIMITED
- 9 -
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.
David Petrassi BA (Hons) FCCA FCA
Senior Statutory Auditor
For and on behalf of Francis James & Partners LLP
30 September 2022
Chartered Accountants
Statutory Auditor
1386 London Road
Leigh on Sea
Essex
England
SS9 2UJ
GARDENING EXPRESS LIMITED
PROFIT AND LOSS ACCOUNT
FOR THE YEAR ENDED 31 DECEMBER 2021
- 10 -
2021
2020
Notes
£
£
Gross profit
1,174,878
1,856,648
Administrative expenses
(886,843)
(404,327)
Operating profit
4
288,035
1,452,321
Interest receivable and similar income
7
44
Interest payable and similar expenses
8
(14,418)
(54,843)
Profit before taxation
273,661
1,397,478
Tax on profit
9
(57,490)
(212,067)
Profit for the financial year
216,171
1,185,411
The profit and loss account has been prepared on the basis that all operations are continuing operations.
GARDENING EXPRESS LIMITED
STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEAR ENDED 31 DECEMBER 2021
- 11 -
2021
2020
£
£
Profit for the year
216,171
1,185,411
Other comprehensive income
-
-
Total comprehensive income for the year
216,171
1,185,411
GARDENING EXPRESS LIMITED
BALANCE SHEET
AS AT
31 DECEMBER 2021
31 December 2021
- 12 -
2021
2020
Notes
£
£
£
£
Fixed assets
Goodwill
10
1
1
Other intangible assets
10
76,819
85,614
Total intangible assets
76,820
85,615
Tangible assets
11
454,079
151,500
530,899
237,115
Current assets
Stocks
12
2,166,224
1,248,724
Debtors
13
3,035,301
2,487,668
Cash at bank and in hand
774,973
1,192,339
5,976,498
4,928,731
Creditors: amounts falling due within one year
14
(1,922,610)
(2,254,504)
Net current assets
4,053,888
2,674,227
Total assets less current liabilities
4,584,787
2,911,342
Creditors: amounts falling due after more than one year
16
(1,436,739)
(27,382)
Provisions for liabilities
Deferred tax liability
17
47,917
(47,917)
-
Net assets
3,100,131
2,883,960
Capital and reserves
Called up share capital
19
1,000
1,000
Profit and loss reserves
3,099,131
2,882,960
Total equity
3,100,131
2,883,960
The financial statements were approved and signed by the director and authorised for issue on 30 September 2022
Mr C D Bonnett
Director
Company Registration No. 05202816
GARDENING EXPRESS LIMITED
STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 DECEMBER 2021
- 13 -
Share capital
Profit and loss reserves
Total
£
£
£
Balance at 1 January 2020
1,000
1,697,549
1,698,549
Year ended 31 December 2020:
Profit and total comprehensive income for the year
-
1,185,411
1,185,411
Balance at 31 December 2020
1,000
2,882,960
2,883,960
Year ended 31 December 2021:
Profit and total comprehensive income for the year
-
216,171
216,171
Balance at 31 December 2021
1,000
3,099,131
3,100,131
GARDENING EXPRESS LIMITED
STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED 31 DECEMBER 2021
- 14 -
2021
2020
Notes
£
£
£
£
Cash flows from operating activities
Cash (absorbed by)/generated from operations
24
(824,273)
1,643,811
Interest paid
(14,418)
(54,843)
Income taxes refunded/(paid)
2,006
(46,499)
Net cash (outflow)/inflow from operating activities
(836,685)
1,542,469
Investing activities
Purchase of intangible assets
(13,392)
Purchase of tangible fixed assets
(405,824)
(934)
Interest received
44
Net cash used in investing activities
(419,172)
(934)
Financing activities
Repayment of borrowings
(3,000)
Repayment of bank loans
841,491
(110,017)
Net cash generated from/(used in) financing activities
838,491
(110,017)
Net (decrease)/increase in cash and cash equivalents
(417,366)
1,431,518
Cash and cash equivalents at beginning of year
1,192,339
(239,179)
Cash and cash equivalents at end of year
774,973
1,192,339
GARDENING EXPRESS LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2021
- 15 -
1
Accounting policies
Company information
Gardening Express Limited is a
private
company
limited by shares
incorporated in
England and Wales
.
The registered office is
1386 London Road, Leigh on Sea, Essex, England, SS9 2UJ.
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, [modified to include the revaluation of freehold properties and to include investment properties and certain financial instruments at fair value]. The principal accounting policies adopted are set out below.
1.2
Going concern
A
true
t the time of approving the financial statements
,
t
he director has a reasonable expectation that the
company
has adequate resources to continue in operational existence for the foreseeable future. Thus
t
he director continues to adopt the going concern basis of accounting in preparing the financial statements.
1.3
Turnover
Turnover is recognised at the fair value of the consideration received or receivable for goods provided in the normal course of business
, and
is shown net of VAT and other sales related taxes
.
Revenue from the sale of goods is recognised when the significant risks and rewards of ownership of the goods have passed to the buyer
(usually on dispatch of the goods)
, the amount of revenue can be measured reliably, it is probable that the economic benefits associated with the transaction will flow to the entity and the costs incurred or to be incurred in respect of the transaction can be measured reliably.
1.4
Intangible fixed assets - goodwill
Goodwill represents the excess of the cost of acquisition of unincorporated businesses over the fair value of net assets acquired. It is initially recognised as an asset at cost and is subsequently measured at cost less accumulated
amortisation and accumulated impairment losses. Goodwill is considered to have a finite useful life and is amortised on a systematic basis over its expected life, which is 10 years.
For the purposes of impairment testing, goodwill is allocated to the cash-generating units expected to benefit from the acquisition. Cash-generating units to which goodwill has been allocated are tested for impairment at least annually, or more frequently when there is an indication that the unit may be impaired. If the recoverable amount of the cash-generating unit is less than the carrying amount of the unit, the impairment loss is allocated first to reduce the carrying amount of any goodwill allocated to the unit and then to the other assets of the unit pro-rata on the basis of the carrying amount of each asset in the unit.
1.5
Intangible fixed assets other than goodwill
Intangible assets acquired separately from a business are recognised at cost and are subsequently measured at cost less accumulated amortisation and accumulated impairment losses.
Intangible assets acquired on business combinations are recognised separately from goodwill at the acquisition date
where
it is probable that the expected future economic benefits that are attributable to the asset will flow to the entity and the
fair
value of the asset can be measured reliably; the intangible asset arises from contractual or other legal rights; and the intangible asset is separable from the entity.
GARDENING EXPRESS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2021
1
Accounting policies
(Continued)
- 16 -
Amortisation is recognised so as to write off the cost or valuation of assets less their residual values over their useful lives on the following bases:
Software and Web-site development
over the estimated useful life
1.6
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.
Depreciation is recognised so as to write off the cost or valuation of assets less their residual values over their useful lives on the following bases:
Plant and equipment
20% reducing balance
Fixtures and fittings
20% reducing balance
Computers
33% on cost
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
.
1.7
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). Where it is not possible to estimate the recoverable amount of an individual asset, the
company
estimates the recoverable amount of the cash-generating unit to which the asset belongs.
Recoverable amount is the higher of fair value less costs to sell and value in use. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset for which the estimates of future cash flows have not been adjusted.
If the recoverable amount of an asset (or cash-generating unit) is estimated to be less than its carrying amount, the carrying amount of the asset (or cash-generating unit) is reduced to its recoverable amount. An impairment loss is recognised immediately in
profit
or
loss
, unless the relevant asset is carried at a revalued amount, in which case the impairment loss is treated as a revaluation decrease.
Recognised impairment losses are reversed if, and only if, the reasons for the impairment loss have ceased to apply. Where an impairment loss subsequently reverses, the carrying amount of the asset (or cash-generating unit) is increased to the revised estimate of its recoverable amount, but so that the increased carrying amount does not exceed the carrying amount that would have been determined had no impairment loss been recognised for the asset (or cash-generating unit)
in
prior years. A reversal of an impairment loss is recognised immediately in
profit
or
loss
, unless the relevant asset is carried at a revalued amount, in which case the reversal of the impairment loss is treated as a revaluation increase.
1.8
Stocks
Stocks are stated at the lower of cost and estimated selling price less costs to complete and sell. Cost comprises direct materials and, where applicable, direct labour costs and those overheads that have been incurred in bringing the stocks to their present location and condition.
The valuation of the stocks of growing crops includes provision for any increase in value as the cro
p
grows and matures into a higher value item.
Stocks held for distribution at no or nominal consideration are measured at the lower of cost and replacement cost, this includes any packaging materials held.
GARDENING EXPRESS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2021
1
Accounting policies
(Continued)
- 17 -
At each reporting date, an assessment is made for impairment. Any excess of the carrying amount of stocks over its estimated selling price less costs to complete and sell is recognised as an impairment loss in profit or loss. Reversals of impairment losses are also recognised in profit or loss.
1.9
Cash and cash equivalents
Cash and cash equivalents
are basic financial assets
and
include cash in hand, deposits held at call with banks, other short-term liquid investments with original maturities of three months or less, and bank overdrafts. Bank overdrafts are shown within borrowings in current liabilities.
1.10
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.
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.
GARDENING EXPRESS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2021
1
Accounting policies
(Continued)
- 18 -
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.
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 th
r
ough 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.
1.11
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.
1.12
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.
GARDENING EXPRESS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2021
1
Accounting policies
(Continued)
- 19 -
Deferred tax
Deferred tax liabilities are generally recognised for all timing differences and deferred tax assets are recognised to the extent that it is probable that they will be recovered against the reversal of deferred tax liabilities or other future taxable profits. Such assets and liabilities are not recognised if the timing difference arises from goodwill or from the initial recognition of other assets and liabilities in a transaction that affects neither the tax profit nor the accounting profit.
The carrying amount of deferred tax assets is reviewed at each reporting end date and reduced to the extent that it is no longer probable that sufficient taxable profits will be available to allow all or part of the asset to be recovered. Deferred tax is calculated at the tax rates that are expected to apply in the period when the liability is settled or the asset is realised. Deferred tax is charged or credited in the
profit and loss account
, except when it relates to items charged or credited directly to equity, in which case the deferred tax is also dealt with in equity. Deferred tax assets and liabilities are offset when the
company
has a legally enforceable right to offset current tax assets and liabilities and the deferred tax assets and liabilities relate to taxes levied by the same tax authority.
1.13
Employee benefits
The costs of short-term employee benefits are recognised as a liability and an expense, unless those costs are required to be recognised as part of the cost of stock or
fixed assets
.
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.
1.14
Retirement benefits
Payments to defined contribution retirement benefit schemes are charged as an expense as they fall due.
1.15
Leases
Rentals payable under operating leases,
including
any lease incentives received, are charged to
profit or loss
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
s
asset are consumed.
1.16
Foreign exchange
Transactions in currencies other than
pounds sterling
are recorded at the rates of exchange prevailing at the dates of the transactions. At each reporting end date, monetary assets and liabilities that are denominated in foreign currencies are retranslated at the rates prevailing on the reporting end date. Gains and losses arising on translation
in the period
are included in profit or loss.
2
Judgements and key sources of estimation uncertainty
In the application of the company’s accounting policies, the director is 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.
GARDENING EXPRESS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2021
- 20 -
3
Turnover and other revenue
2021
2020
£
£
Turnover analysed by class of business
Online retail
17,249,853
18,081,441
2021
2020
£
£
Other revenue
Interest income
44
-
4
Operating profit
2021
2020
Operating profit for the year is stated after charging:
£
£
Fees payable to the company's auditor for the audit of the company's financial statements
5,500
4,500
Depreciation of owned tangible fixed assets
103,245
37,990
Amortisation of intangible assets
22,187
18,839
Operating lease charges
94,209
41,070
5
Employees
The average monthly number of persons (including directors) employed by the company during the year was:
2021
2020
Number
Number
19
14
Their aggregate remuneration comprised:
2021
2020
£
£
Wages and salaries
400,593
266,190
Social security costs
33,518
21,185
Pension costs
22,971
4,842
457,082
292,217
6
Director's remuneration
2021
2020
£
£
Remuneration for qualifying services
12,000
12,000
GARDENING EXPRESS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2021
- 21 -
7
Interest receivable and similar income
2021
2020
£
£
Interest income
Interest on bank deposits
44
Investment income includes the following:
Interest on financial assets not measured at fair value through profit or loss
44
8
Interest payable and similar expenses
2021
2020
£
£
Interest on financial liabilities measured at amortised cost:
Other interest on financial liabilities
12,411
32,829
Other finance costs:
Other interest
2,007
22,014
14,418
54,843
9
Taxation
2021
2020
£
£
Current tax
UK corporation tax on profits for the current period
210,688
Deferred tax
Origination and reversal of timing differences
57,490
1,379
Total tax charge
57,490
212,067
GARDENING EXPRESS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2021
9
Taxation
(Continued)
- 22 -
The actual 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:
2021
2020
£
£
Profit before taxation
273,661
1,397,478
Expected tax charge based on the standard rate of corporation tax in the UK of 19.00% (2020: 19.00%)
51,996
265,521
Group relief
9,699
(55,185)
Permanent capital allowances in excess of depreciation
(61,694)
352
Deferred tax movement
57,489
1,379
Taxation charge for the year
57,490
212,067
10
Intangible fixed assets
Goodwill
Software and Web-site development
Total
£
£
£
Cost
At 1 January 2021
26,500
188,391
214,891
Additions
13,392
13,392
At 31 December 2021
26,500
201,783
228,283
Amortisation and impairment
At 1 January 2021
26,499
102,777
129,276
Amortisation charged for the year
22,187
22,187
At 31 December 2021
26,499
124,964
151,463
Carrying amount
At 31 December 2021
1
76,819
76,820
At 31 December 2020
1
85,614
85,615
GARDENING EXPRESS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2021
- 23 -
11
Tangible fixed assets
Plant and equipment
Fixtures and fittings
Computers
Total
£
£
£
£
Cost
At 1 January 2021
440,438
11,423
7,751
459,612
Additions
399,848
709
5,267
405,824
At 31 December 2021
840,286
12,132
13,018
865,436
Depreciation and impairment
At 1 January 2021
294,868
5,711
7,533
308,112
Depreciation charged in the year
101,629
838
778
103,245
At 31 December 2021
396,497
6,549
8,311
411,357
Carrying amount
At 31 December 2021
443,789
5,583
4,707
454,079
At 31 December 2020
145,570
5,712
218
151,500
During the year the company has invested in the Plant and Machinery and infrastructure at its main distribution centre to allow for future growth.
12
Stocks
2021
2020
£
£
Growing crops and other stock for sale
2,166,224
1,248,724
13
Debtors
2021
2020
Amounts falling due within one year:
£
£
Trade debtors
80,948
71,667
Amounts owed by group undertakings
2,613,812
2,393,239
Other debtors
340,541
13,189
3,035,301
2,478,095
Deferred tax asset (note 17)
9,573
3,035,301
2,487,668
GARDENING EXPRESS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2021
- 24 -
14
Creditors: amounts falling due within one year
2021
2020
Notes
£
£
Bank loans
15
87,643
658,509
Trade creditors
855,291
930,260
Amounts owed to group undertakings
1,933
Corporation tax
279,175
277,168
Other taxation and social security
329,493
7,421
Other creditors
340,073
352,145
Accruals and deferred income
29,002
29,001
1,922,610
2,254,504
15
Loans and overdrafts
2021
2020
£
£
Bank loans
1,500,000
658,509
Other loans
24,382
27,382
1,524,382
685,891
Payable within one year
87,643
658,509
Payable after one year
1,436,739
27,382
The long-term loans are
now guaranteed under the government backed Corona Virus Business Interruption loan scheme.
The new Corona Virus Business Interruption loan is to be repaid over a period of 6 years. Repayments commence on the first anniversary of the drawdown of the loan.
The loan is subject to interest at 4.25% over Bank of England base rate.
16
Creditors: amounts falling due after more than one year
2021
2020
Notes
£
£
Bank loans and overdrafts
15
1,412,357
Other borrowings
15
24,382
27,382
1,436,739
27,382
GARDENING EXPRESS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2021
- 25 -
17
Deferred taxation
The following are the major deferred tax liabilities and assets recognised by the company and movements thereon:
Liabilities
Liabilities
Assets
Assets
2021
2020
2021
2020
Balances:
£
£
£
£
Accelerated capital allowances
47,917
-
-
9,573
2021
Movements in the year:
£
Asset at 1 January 2021
(9,573)
Charge to profit or loss
57,490
Liability at 31 December 2021
47,917
The deferred tax liability set out above is expected to reverse within [12 months] and relates to accelerated capital allowances that are expected to mature within the same period.
18
Retirement benefit schemes
2021
2020
Defined contribution schemes
£
£
Charge to profit or loss in respect of defined contribution schemes
22,971
4,842
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.
19
Share capital
2021
2020
2021
2020
Ordinary share capital
Number
Number
£
£
Issued and fully paid
Ordinary shares of £1 each
1,000
1,000
1,000
1,000
20
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:
2021
2020
£
£
Within one year
12,000
12,000
GARDENING EXPRESS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2021
- 26 -
22
Directors' transactions
Dividends totalling £0 (2020 - £0) were paid in the year in respect of shares held by the company's directors.
During the year the company rented part of its nursery facilities from the director for £22,000.
During the year the company paid a one-off management charge of £365,000 to a fellow subsidiary company.
23
Ultimate controlling party
The ultimate parent company is Gardening Express Group Holdings Limited
24
Cash (absorbed by)/generated from operations
2021
2020
£
£
Profit for the year after tax
216,171
1,185,411
Adjustments for:
Taxation charged
57,490
212,067
Finance costs
14,418
54,843
Investment income
(44)
Amortisation and impairment of intangible assets
22,187
18,839
Depreciation and impairment of tangible fixed assets
103,245
37,990
Movements in working capital:
(Increase)/decrease in stocks
(917,500)
517,781
Increase in debtors
(557,206)
(416,094)
Increase in creditors
236,966
32,974
Cash (absorbed by)/generated from operations
(824,273)
1,643,811
25
Analysis of changes in net funds/(debt)
1 January 2021
Cash flows
31 December 2021
£
£
£
Cash at bank and in hand
1,192,339
(417,366)
774,973
Borrowings excluding overdrafts
(685,891)
(838,491)
(1,524,382)
506,448
(1,255,857)
(749,409)
2021-12-31
2021-01-01
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