Company Registration No. 00896298 (England and Wales)
GROVE PET FOODS LIMITED
ANNUAL REPORT AND FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2019
GROVE PET FOODS LIMITED
COMPANY INFORMATION
Directors
A R Turner
J R Walgate
Company number
00896298
Registered office
Lodge Farm
Wigsley Road
North Scarle
Lincoln
England
LN6 9HD
Auditor
BHP LLP
2 Rutland Park
Sheffield
S10 2PD
Bankers
The Royal Bank of Scotland plc
5 Church Street
Sheffield
S1 1HF
GROVE PET FOODS LIMITED
CONTENTS
Page
Strategic report
1
Directors' report
2 - 3
Independent auditor's report
4 - 5
Statement of comprehensive income
6
Balance sheet
7
Statement of changes in equity
8
Notes to the financial statements
9 - 24
GROVE PET FOODS LIMITED
STRATEGIC REPORT
FOR THE YEAR ENDED 31 DECEMBER 2019
- 1 -
The directors present the strategic report for the year ended 31 December 2019.
Fair review of the business
The principal activities of the company are the manufacture and sale of pet foods, under the Alpha, Vitalin and Richa brands, as well as under private label contracts.
During the year the company continued to make planned operational efficiency gains which resulted in improved profitability. There was capital investment in excess of £850,000 in new plant and machinery. This programme will continue in 2020 to enhance future capacity and productivity.
The focus of the business is on producing premium quality, higher margin products and lower value sales have been traded for higher value revenue streams. Turnover was £18,801,170 compared with the previous year £19,260,010 with the expectation for growth in the year ahead as new contracts come to fruition.
At the end of the financial year Balance Sheet net assets increased from £2,325,811 to £3,255,219.
The investment in improving the skill base of the workforce through training and engagement is having positive results and will continue in the year ahead.
Environmental issues have never been under more scrutiny. The company is actively examining every area of the business in order to secure a more sustainable future.
The directors consider the result for the year to be satisfactory and continue with the strategy to increase long term shareholder value.
Principal risks and uncertainties
The main risk facing the company is fluctuation in raw material costs. The company uses forward contracts to manage risk in purchasing.
Key performance indicators
A R Turner
Director
4 June 2020
GROVE PET FOODS LIMITED
DIRECTORS' REPORT
FOR THE YEAR ENDED 31 DECEMBER 2019
- 2 -
The directors present their report and financial statements for the year ended 31 December 2019.
Principal activities
The principal activity
of the company
continued to be the manufacture and supply
of animal and pet foods, under the Alpha, Vitalin and Richa brands, as well as under private label contracts
.
Directors
The directors who held office during the year and up to the date of signature of the financial statements were as follows:
A R Turner
J R Walgate
Results and dividends
The results for the year are set out on page 6.
No ordinary dividends were paid. The directors do not recommend payment of a final dividend.
Statement of directors' responsibilities
The directors are responsible for preparing the annual report and the financial statements in accordance with applicable law and regulations.
Company law requires the directors to prepare financial statements for each financial year. Under that law the directors have elected to prepare the financial statements in accordance with United Kingdom Generally Accepted Accounting Practice (United Kingdom Accounting Standards and applicable law). Under company law the directors must not approve the financial statements unless they are satisfied that they give a true and fair view of the state of affairs of the company and of the profit or loss of the company for that period. In preparing these financial statements, the directors are required to:
-
select suitable accounting policies and then apply them consistently;
-
make judgements and accounting estimates that are reasonable and prudent;
-
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 company will continue in business.
The directors are responsible for keeping adequate accounting records that are sufficient to show and explain the company’s transactions and disclose with reasonable accuracy at any time the financial position of the company and enable them to ensure that the financial statements comply with the Companies Act 2006. They are also responsible for safeguarding the assets of the company and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.
GROVE PET FOODS LIMITED
DIRECTORS' REPORT (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2019
- 3 -
Statement of disclosure to auditor
So far as each person who was a director at the date of approving this report is aware, there is no relevant audit information of which the company’s auditor is unaware. Additionally, the directors individually have taken all the necessary steps that they ought to have taken as directors in order to make themselves aware of all relevant audit information and to establish that the company’s auditor is aware of that information.
On behalf of the board
A R Turner
Director
4 June 2020
GROVE PET FOODS LIMITED
INDEPENDENT AUDITOR'S REPORT
TO THE MEMBERS OF GROVE PET FOODS LIMITED
- 4 -
Opinion
We have audited the financial statements of Grove Pet Foods 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 notes to the financial statements, including a summary of significant accounting policies.
The financial reporting framework that has been applied in their preparation is applicable law and United Kingdom Accounting Standards, including FRS 102
The Financial Reporting Standard applicable in the UK and Republic of Ireland
(United Kingdom Generally Accepted Accounting Practice).
In our opinion the financial statements:
-
give a true and fair view of the state of the company's affairs as at 31 December 2019 and of its profit for the year then ended;
-
have been properly prepared in accordance with United Kingdom Generally Accepted Accounting Practice; and
-
have been prepared in accordance with the requirements of the Companies Act 2006.
We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and applicable law. Our responsibilities under those standards are further described in the
Auditor's
responsibilities for the audit of the financial statements
section of our report. We are independent of the company in accordance with the ethical requirements that are relevant to our audit of the financial statements in the UK, including the FRC’s Ethical Standard
, and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
Conclusions relating to going concern
We have nothing to report in respect of the following matters in relation to which the ISAs (UK) require us to report to you where:
-
the directors' use of the going concern basis of accounting in the preparation of the financial statements is not appropriate; or
-
the directors have not disclosed in the financial statements any identified material uncertainties that may cast significant doubt about the company’s ability to continue to adopt the going concern basis of accounting for a period of at least twelve months from the date when the financial statements are authorised for issue
.
The directors are responsible for the other information. The other information comprises the information included in the annual report, other than the financial statements and our auditor’s report thereon. Our opinion on the
financial statements
does not cover the other information and, except to the extent otherwise explicitly stated in our report, we do not express any form of assurance conclusion thereon.
In connection with our audit of the financial statements, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the audit or otherwise appears to be materially misstated. If we identify such material inconsistencies or apparent material misstatements, we are required to determine whether there is a material misstatement in the financial statements or a material misstatement of the other information. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact.
We have nothing to report in this regard.
Opinions on other matters prescribed by the Companies Act 2006
In our opinion, based on the work undertaken in the course of our audit
:
-
the information given in the strategic report and the directors' r
eport for the financial year for which the financial statements are prepared is consistent with the financial statements
; and
-
the strategic report and the directors' report have been prepared in accordance with applicable legal requirements.
GROVE PET FOODS LIMITED
INDEPENDENT AUDITOR'S REPORT (CONTINUED)
TO THE MEMBERS OF GROVE PET FOODS LIMITED
- 5 -
Matters on which we are required to report by exception
In the light of the knowledge and understanding of the company and its environment obtained in the course of the audit, we have not identifie
d
material misstatements in the strategic report and the directors'
r
eport
.
We have nothing to report in respect of the following matters where the Companies Act 2006 requires us to report to you if, in our opinion:
-
adequate accounting records have not been kept, or returns adequate for our audit have not been received from branches not visited by us; or
-
the financial statements are not in agreement with the accounting records and returns; or
-
certain disclosures of directors' remuneration specified by law are not made; or
-
we have not received all the information and explanations we require for our audit.
Responsibilities of directors
As explained more fully in the directors'
r
esponsibilities
s
tatement, the directors are responsible for the preparation of the financial statements and for being satisfied that they give a true and fair view, and for such internal control as the directors determine is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.
In preparing the financial statements, the directors are responsible for assessing the company’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the directors either intend to liquidate the company or to cease operations, or have no realistic alternative but to do so.
Auditor's responsibilities for the audit of the financial statements
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with ISAs (UK) will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements.
A further description of our responsibilities for the audit of the financial statements is located on the
Financial Reporting Council’s website at: http://www.frc.org.uk/auditorsresponsibilities
.
This description forms part of our auditor’s report.
Use of our 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 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.
Lisa Leighton (Senior Statutory Auditor)
for and on behalf of BHP LLP
4 June 2020
Chartered Accountants
Statutory Auditor
2 Rutland Park
Sheffield
S10 2PD
GROVE PET FOODS LIMITED
STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEAR ENDED 31 DECEMBER 2019
- 6 -
2019
2018
Notes
£
£
Turnover
3
18,801,170
19,260,010
Cost of sales
(13,313,436)
(14,663,658)
Gross profit
5,487,734
4,596,352
Administrative expenses
(4,296,788)
(3,765,100)
Operating profit before exceptional costs
5
1,190,946
831,252
Bad debts
4
-
(85,967)
Operating profit after exceptional costs
1,190,946
745,285
Interest receivable and similar income
8
82
-
Interest payable and similar expenses
9
(91,620)
(107,066)
Profit before taxation
1,099,408
638,219
Tax on profit
10
(170,000)
127,747
Profit for the financial year
929,408
765,966
Other comprehensive income
Revaluation of tangible fixed assets
(29,780)
(28,729)
Total comprehensive income for the year
899,628
737,237
The Profit and Loss account has been prepared on the basis that all operations are continuing operations.
GROVE PET FOODS LIMITED
BALANCE SHEET
AS AT 31 DECEMBER 2019
31 December 2019
- 7 -
2019
2018
Notes
£
£
£
£
Fixed assets
Intangible assets
12
93,844
106,285
Tangible assets
13
4,157,833
4,237,032
4,251,677
4,343,317
Current assets
Stocks
15
1,511,708
1,326,322
Debtors
16
1,452,744
1,937,826
Cash at bank and in hand
207,823
136,764
3,172,275
3,400,912
Creditors: amounts falling due within one year
17
(3,014,117)
(4,207,949)
Net current assets/(liabilities)
158,158
(807,037)
Total assets less current liabilities
4,409,835
3,536,280
Creditors: amounts falling due after more than one year
18
(1,093,616)
(1,210,469)
Provisions for liabilities
21
(61,000)
-
Net assets
3,255,219
2,325,811
Capital and reserves
Called up share capital
24
2,000,000
2,000,000
Revaluation reserve
125,311
155,091
Profit and loss reserves
1,129,908
170,720
Total equity
3,255,219
2,325,811
The financial statements were approved by the board of directors and authorised for issue on 4 June 2020 and are signed on its behalf by:
A R Turner
Director
Company Registration No. 00896298
GROVE PET FOODS LIMITED
STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 DECEMBER 2019
- 8 -
Share capital
Revaluation reserve
Profit and loss reserves
Total
£
£
£
£
Balance at 1 January 2018
2,000,000
183,820
(623,975)
1,559,845
Year ended 31 December 2018:
Profit for the year
-
-
765,966
765,966
Other comprehensive income:
Transfer of excess depreciation on revalued tangible fixed assets
-
(28,729)
28,729
-
Total comprehensive income for the year
-
(28,729)
794,695
765,966
Balance at 31 December 2018
2,000,000
155,091
170,720
2,325,811
Year ended 31 December 2019:
Profit for the year
-
-
929,408
929,408
Other comprehensive income:
Transfer of excess depreciation on revalued tangible fixed assets
-
(29,780)
29,780
-
Total comprehensive income for the year
-
(29,780)
959,188
929,408
Balance at 31 December 2019
2,000,000
125,311
1,129,908
3,255,219
GROVE PET FOODS LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2019
- 9 -
1
Accounting policies
Company information
Grove Pet Foods Limited is a
private
company
limited by shares
incorporated in England and Wales.
The registered office is
Lodge Farm, Wigsley Road, North Scarle, Lincoln, England, LN6 9HD.
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 certain financial instruments at fair value. The principal accounting policies adopted are set out below.
This company is a qualifying entity for the purposes of FRS 102, being a member of a group where the parent of that group prepares
publicly available consolidated financial statements
, including this company,
which are
intended to give a true and fair view of the assets, liabilities,
financial position and profit or loss
of the group
.
T
he company has
therefore
taken advantage of
e
xemptions from the following disclosure requirements:
- Section 7 ‘Statement of Cash Flows’: Presentation of a statement of cash flow and related notes and disclosures
.
The financial statements of the company are consolidated in the financial statements of
Holdco Alpha Limited
. These consolidated financial statements are available from its registered office
or can be obtained from Companies House.
1.2
Going concern
A
true
t the time of approving the financial statements
,
t
he directors have a reasonable expectation that the
company
has adequate resources to continue in operational existence for the foreseeable future.
The directors have considered the potential impact on the activities of the company of the COVID-19 pandemic as set out in note 27 and do not believe that any impact will be significant.
Thus
t
he directors continue 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 and services provided in the normal course of business
, and
is shown net of VAT and other sales related taxes
.
The fair value of consideration takes into account trade discounts, settlement discounts and volume rebates.
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.
GROVE PET FOODS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2019
1
Accounting policies
(Continued)
- 10 -
1.4
Intangible fixed assets - goodwill
Goodwill represents the excess of the cost of acquisition of 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 ten 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 are recognised at cost and are subsequently measured at cost less accumulated amortisation and accumulated impairment losses
.
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:
Branding
4 years
Goodwill
10 years
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 machinery
over 3 - 10 years
Fixtures, fittings & equipment
over 4 - 10 years
Motor vehicles
over 4 years
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.
GROVE PET FOODS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2019
1
Accounting policies
(Continued)
- 11 -
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.
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 at bank and in hand
Cash and cash equivalents
are basic financial assets
and
include cash in hand, deposits held at call with banks 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.
GROVE PET FOODS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2019
1
Accounting policies
(Continued)
- 12 -
Impairment of financial assets
Financial assets, other than those
held
at
fair value through profit and loss
, are assessed for indicators of impairment at each reporting end date.
Financial assets are impaired where there is objective evidence that, as a result of one or more events that occurred after the initial recognition of the financial asset, the estimated future cash flows have been affected.
If an asset is impaired, the impairment loss is the difference between the carrying amount and the present value of the estimated cash flows discounted at the asset’s original effective interest rate. The impairment loss is recognised in profit or loss.
If there is a decrease in the impairment loss arising from an event occurring after the impairment was recognised, the impairment is reversed. The reversal is such that the current carrying amount does not exceed what the carrying amount would have been, had the impairment not previously been recognised. The impairment reversal is recognised in profit or loss.
Derecognition of financial assets
Financial assets are derecognised only when the contractual rights to the cash flows from the asset expire or are settled, or when
the company
transfers the financial asset and substantially all the risks and rewards of ownership to another entity, or if some significant risks and rewards of ownership are retained but control of the asset has transferred to another party that is able to sell the asset in its entirety to an unrelated third party.
Classification of financial liabilities
Financial liabilities are classified according to the substance of the contractual arrangements entered into.
Basic financial liabilities
Basic financial liabilities, including creditors, bank loans
and
loans from
connected companies
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 receipts discounted at a market rate of interest.
Financial liabilities classified as payable within one year are not amortised.
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.
Derecognition of financial liabilities
Financial liabilities are derecognised when the company’s contractual obligations
expire or are discharged or cancelled.
1.11
Taxation
The tax expense represents the sum of the tax currently payable and deferred tax.
Current tax
The tax currently payable is based on taxable profit for the year. Taxable profit differs from net profit as reported in the profit and loss account because it excludes items of income or expense that are taxable or deductible in other years and it further excludes items that are never taxable or deductible. The
company’s
liability for current tax is calculated using tax rates that have been enacted or substantively enacted by the reporting end date.
GROVE PET FOODS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2019
1
Accounting policies
(Continued)
- 13 -
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.
1.12
Employee benefits
The costs of short-term employee benefits are recognised as a liability and an expense
.
1.13
Retirement benefits
Payments to defined contribution retirement benefit schemes are charged as an expense as they fall due.
1.14
Leases
Leases are classified as finance leases whenever the terms of the lease transfer substantially all the risks and rewards of ownership to the lessees. All other leases are classified as operating leases.
Assets held under finance leases are recognised as assets at the lower of the assets fair
value at the date of inception and the present value of the minimum lease payments. The related liability is included in the balance sheet as a finance lease obligation. Lease payments are treated as consisting of capital and interest elements. The interest is charged to profit or loss so as to produce a constant periodic rate of interest on the remaining balance of the liability.
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.
1.15
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 are included in the profit and loss account for the period.
GROVE PET FOODS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2019
- 14 -
2
Judgements and key sources of estimation uncertainty
In the application of the company’s accounting policies, the directors are required to make judgements, estimates and assumptions about the carrying amount of assets and liabilities that are not readily apparent from other sources. The estimates and associated assumptions are based on historical experience and other factors that are considered to be relevant. Actual results may differ from these estimates.
The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised where the revision affects only that period, or in the period of the revision and future periods where the revision affects both current and future periods.
3
Turnover and other revenue
An analysis of the company's turnover is as follows:
2019
2018
£
£
Turnover analysed by class of business
Pet food
18,801,170
19,169,842
Animal food
-
90,168
18,801,170
19,260,010
2019
2018
£
£
Turnover analysed by geographical market
UK
18,372,658
18,816,486
Europe
247,421
247,777
Other
181,091
195,747
18,801,170
19,260,010
4
Exceptional item
2019
2018
£
£
Bad debts
-
85,967
GROVE PET FOODS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2019
- 15 -
5
Operating profit
2019
2018
Operating profit for the year is stated after charging/(crediting):
£
£
Exchange (gains)/losses
(8,395)
19,822
Fees payable to the company's auditor for the audit of the company's financial statements
13,150
12,750
Depreciation of owned tangible fixed assets
383,860
547,847
Depreciation of tangible fixed assets held under finance leases
275,918
23,951
Impairment of owned tangible fixed assets
283,701
-
Profit on disposal of tangible fixed assets
(661)
(4,422)
Amortisation of intangible assets
45,908
45,645
Operating lease charges
169,429
131,163
6
Employees
The average monthly number of persons (including directors) employed by the company during the year was:
2019
2018
Number
Number
Production
67
66
Administration
19
21
Management
10
10
96
97
Their aggregate remuneration comprised:
2019
2018
£
£
Wages and salaries
2,727,343
2,790,571
Pension costs
67,497
47,817
2,794,840
2,838,388
7
Directors' remuneration
2019
2018
£
£
Remuneration for qualifying services
171,119
227,087
The number of directors for whom retirement benefits are accruing under defined contribution schemes amounted to 2 (2018 - 2).
GROVE PET FOODS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2019
7
Directors' remuneration
(Continued)
- 16 -
Remuneration disclosed above include the following amounts paid to the highest paid director:
2019
2018
£
£
Remuneration for qualifying services
n/a
136,000
Company pension contributions to defined contribution schemes
n/a
10,408
As total directors' remuneration was less than £200,000 in the current year, no disclosure is provided for that year.
8
Interest receivable and similar income
2019
2018
£
£
Interest income
Other interest income
82
-
9
Interest payable and similar expenses
2019
2018
£
£
Interest on financial liabilities measured at amortised cost:
Interest on bank overdrafts and loans
13,863
23,299
Other finance costs:
Interest on finance leases and hire purchase contracts
41,757
47,767
Other interest
36,000
36,000
91,620
107,066
10
Taxation
2019
2018
£
£
Current tax
Adjustments in respect of prior periods
-
(18,747)
Deferred tax
Origination and reversal of timing differences
170,000
(109,000)
Total tax charge/(credit)
170,000
(127,747)
GROVE PET FOODS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2019
10
Taxation
(Continued)
- 17 -
The actual charge/(credit) 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:
2019
2018
£
£
Profit before taxation
1,099,408
638,219
Expected tax charge based on the standard rate of corporation tax in the UK of 19.00% (2018: 19.00%)
208,888
121,262
Tax effect of expenses that are not deductible in determining taxable profit
668
3,159
Change in unrecognised deferred tax assets
(14,845)
(249,654)
Adjustments in respect of prior years
-
(18,747)
Other permanent differences
(2,965)
2,776
Deferred tax adjustments in respect of prior years
(21,746)
13,457
Taxation charge/(credit) for the year
170,000
(127,747)
The company has estimated losses of £1,325,000 (2018: £2,031,000) available for carry forward against future trading profits.
11
Impairments
Impairment tests have been carried out where appropriate and the following impairment losses have been recognised in profit or loss:
2019
2018
Notes
£
£
In respect of:
Property, plant and equipment
13
283,701
-
Recognised in:
Administrative expenses
283,701
-
GROVE PET FOODS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2019
- 18 -
12
Intangible fixed assets
Total
£
Cost
At 1 January 2019
2,812,750
Additions - separately acquired
33,467
At 31 December 2019
2,846,217
Amortisation and impairment
At 1 January 2019
2,706,465
Amortisation charged for the year
45,908
At 31 December 2019
2,752,373
Carrying amount
At 31 December 2019
93,844
At 31 December 2018
106,285
13
Tangible fixed assets
Plant and machinery
Fixtures, fittings & equipment
Motor vehicles
Total
£
£
£
£
Cost or valuation
At 1 January 2019
5,741,312
489,796
133,093
6,364,201
Additions
850,532
18,731
-
869,263
Disposals
(4,968)
(3,040)
-
(8,008)
At 31 December 2019
6,586,876
505,487
133,093
7,225,456
Depreciation and impairment
At 1 January 2019
1,737,986
306,022
83,161
2,127,169
Depreciation charged in the year
573,172
58,749
27,857
659,778
Impairment losses
283,701
-
-
283,701
Eliminated in respect of disposals
(19)
(3,006)
-
(3,025)
At 31 December 2019
2,594,840
361,765
111,018
3,067,623
Carrying amount
At 31 December 2019
3,992,036
143,722
22,075
4,157,833
At 31 December 2018
4,003,326
183,774
49,932
4,237,032
GROVE PET FOODS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2019
13
Tangible fixed assets
(Continued)
- 19 -
The net carrying value of tangible fixed assets includes the following in respect of assets held under finance leases or hire purchase contracts.
2019
2018
£
£
Plant and machinery
505,984
781,902
Depreciation charge for the year in respect of leased assets
275,918
23,951
Included within plant and machinery are certain assets which were revalued in 2014. If revalued assets were stated on a historical cost basis rather than a fair value basis, the total amounts included would have been as follows:
2019
2018
£
£
Cost
802,523
802,523
Accumulated depreciation
(784,593)
(773,451)
Carrying value
17,930
29,072
More information on impairment movements in the year is given in note 11.
14
Financial instruments
All financial assets and liabilities are measured at amortised cost.
15
Stocks
2019
2018
£
£
Raw materials and consumables
596,565
646,993
Finished goods and goods for resale
915,143
679,329
1,511,708
1,326,322
GROVE PET FOODS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2019
- 20 -
16
Debtors
2019
2018
Amounts falling due within one year:
£
£
Trade debtors
1,223,177
1,639,341
Amounts owed by related party undertakings
32,754
-
Other debtors
14,932
19,847
Prepayments and accrued income
181,881
169,638
1,452,744
1,828,826
2019
2018
Amounts falling due after more than one year:
£
£
Deferred tax asset (note 22)
-
109,000
Total debtors
1,452,744
1,937,826
17
Creditors: amounts falling due within one year
2019
2018
Notes
£
£
Bank loans and overdrafts
19
121,428
528,334
Obligations under finance leases
20
190,600
323,680
Trade creditors
1,552,536
1,953,825
Amounts owed to related party undertakings
-
77,830
Other taxation and social security
240,171
294,699
Other creditors
552,786
747,581
Accruals and deferred income
356,596
282,000
3,014,117
4,207,949
Included within other creditors are advances against invoices of £354,389 (2018: £729,952). The advances against invoices are secured by first charge over trade debtors.
For details of the bank loan security, please see note 19.
For details of the finance lease security, please see note 20.
GROVE PET FOODS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2019
- 21 -
18
Creditors: amounts falling due after more than one year
2019
2018
Notes
£
£
Bank loans and overdrafts
19
10,120
131,548
Obligations under finance leases
20
363,496
178,921
Other creditors
720,000
900,000
1,093,616
1,210,469
Amounts included above which fall due after five years are as follows:
Payable other than by instalments
-
900,000
19
Loans and overdrafts
2019
2018
£
£
Bank loans
131,548
659,882
Payable within one year
121,428
528,334
Payable after one year
10,120
131,548
Bank loans of £131,548 remain outstanding at the year end. The bank loans are secured by way of a fixed and floating charge over the assets of the company, a personal guarantee provided by A R Turner of up to £500,000 and a guarantee of £850,000 provided by Holdco Alpha Limited.
20
Finance lease obligations
2019
2018
Future minimum lease payments due under finance leases:
£
£
Within one year
190,600
323,680
In two to five years
363,496
178,921
554,096
502,601
Finance lease payments represent rentals payable by the company for certain items of plant and machinery. The average lease term is 5 years. All leases are on a fixed repayment basis and no arrangements have been entered into for contingent rental payments.
The finance leases are secured against the assets to which they relate.
Included within finance leases is an amount outstanding to Close Brothers of £133,862 (2018: £194,394). A personal guarantee limited to £50,000 has been provided by A R Turner in respect of this finance lease.
GROVE PET FOODS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2019
- 22 -
21
Provisions for liabilities
2019
2018
Notes
£
£
Deferred tax liabilities
22
61,000
-
22
Deferred taxation
Deferred tax assets and liabilities are offset where the company has a legally enforceable right to do so. The following is the analysis of the deferred tax balances (after offset) for financial reporting purposes:
Liabilities
Liabilities
Assets
Assets
2019
2018
2019
2018
Balances:
£
£
£
£
Accelerated capital allowances
61,000
-
-
-
Tax losses
-
-
-
109,000
61,000
-
-
109,000
2019
Movements in the year:
£
Asset at 1 January 2019
(109,000)
Charge to profit or loss
170,000
Liability at 31 December 2019
61,000
23
Retirement benefit schemes
2019
2018
Defined contribution schemes
£
£
Charge to profit or loss in respect of defined contribution schemes
67,497
47,817
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.
24
Share capital
2019
2018
£
£
Ordinary share capital
Issued and fully paid
2,000,000 Ordinary shares of £1 each
2,000,000
2,000,000
GROVE PET FOODS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2019
- 23 -
25
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:
2019
2018
£
£
Within one year
201,215
123,779
Between two and five years
519,065
64,648
In over five years
224,583
-
944,863
188,427
26
Capital commitments
Amounts contracted for but not provided in the financial statements:
2019
2018
£
£
Acquisition of tangible fixed assets
180,120
51,741
27
Events after the reporting date
As part of their assessment of the going concern basis of preparation, the directors have considered the impact of the COVID-19 pandemic on the company’s trade, workforce, supply chain and the wider economies in which it operates, as explained in note 1.2. It is the view of the directors that the events which have significantly impacted the company are the direct result of Government and international policy in response to the pandemic (for example restrictions on travel, trade and personal interactions) and such policy only arose after the balance sheet date. The directors therefore consider the impact of the COVID-19 pandemic on the business to be a non-adjusting post-balance sheet event.
GROVE PET FOODS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2019
- 24 -
28
Related party transactions
H Turner & Son Limited
At the year end £302,000 (2018: £921,368) was due to H Turner & Son Limited (a company in which A R Turner is a director), of which £240,000 (2018: £900,000) is included in creditors due over one year, and £62,000 (2018: £21,368) is shown in creditors due within one year.
Holdco HTS Limited
At the year end £600,000 (2018: £nil) was due to Holdco HTS Limited (a company in which A R Turner is a director), of which £480,000 is included in creditors due over one year, and £120,000 is shown in creditors due within one year.
Darlton Hall Estates Ltd
At the year end a balance of £6,128 (2018: £87,606) was due to Darlton Hall Estates Ltd (a company in which A R Turner is a director).
Chestnut Bulk Bins Ltd
At the year end £40,883 (2018: £31,144) was due from Chestnut Bulk Bins Ltd (a company in which A R Turner is a director).
A R Turner has provided personal guarantees as disclosed in notes 19 and 20 of the accounts.
29
Ultimate controlling party
The ultimate holding company is Holdco Alpha Limited, a company registered in England and Wales. The ultimate controlling party is A R Turner, a director of the company.
Copies of group financial statements may be obtained from Holdco Alpha Limited, Lodge Farm, Wigsley Road, North Scarle, England, LN6 9HD.
2019-12-31
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