Shire Oak Quarries Limited is a private company limited by shares incorporated in England and Wales. The registered office is Pillar & Lucy House, Merchants Road, Gloucester, Gloucestershire, England, GL2 5RG.
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 as applicable to companies subject to the small companies regime. The disclosure requirements of section 1A of FRS 102 have been applied other than where additional disclosure is required to show a true and fair view.
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.
The company is a member of a group whose financial position is closely linked to the status and funding of other group undertakings and related parties. Whilst the company is in a net liability position, the parent company has confirmed its current intention to continue to support the company as required. The parent company has prepared cash flow forecasts for a period of 12 months from the date of approval of these financial statements, taking account of anticipated support to be provided by the shareholder.
Whilst we believe the going concern basis is appropriate, the nature of other group and related entities' activities mean that there continues to be inherent uncertainty over the timing of certain future cash flows and the availability of alternative finance , should this be required.
However, after making enquiries and considering the uncertainties described above, the directors confirm that they have a reasonable expectation that the company has adequate resources to continue in operational existence for the foreseeable future and continue to operate within funds available to it.
In light of the above , the directors have adopted the going concern basis of accounting in preparing the financial statements. If the company were unable to continue to trade, adjustments would have to be made to reduce the value of the assets to their recoverable amounts and to provide for any further liabilities that may arise.
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.
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.
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, 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.
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.
Exceptional items
Exceptional items are those which are separately identified by virtue of their size or nature to allow a full understanding of the underlying performance of the company.
The company makes estimates and assumptions concerning the future. The resulting accounting estimates will, by definition, seldom equal the actual results. The estimates and assumptions that have a significant risk of causing material adjustment to the carrying amounts of assets and liabilities within the next financial year are addressed below.
Provision for site rehabilitation works
The company’s accounting policy requires the recognition of a provision for future liabilities associated with the rehabilitation of the quarry and mineral site in line with planning consents. The provision recognised represents management’s best estimate of the present value of the future costs required. Significant estimates and assumptions are made in determining the amount of the rehabilitation provision and these uncertainties may result in future actual expenditure differing from the amounts currently provided.
The provision recognised is periodically reviewed and updated based on the facts and circumstances available at the time. Changes to the estimated future costs are recognised in the balance sheet by adjusting both the fixed asset value and rehabilitation provision. Such changes give rise to a change in future depreciation and financial charges as applicable.
The average monthly number of persons (including directors) employed by the company during the year was 2 (2017 - 2).
Freehold land and buildings with a carrying amount of £1,053,300 have been pledged to secure borrowings in the parent company. The company is not allowed to pledge these assets as security for other borrowings or to sell them to another entity.
As at the balance sheet date, the company had total guarantees, contingencies and commitments of £23,200 (2017: £23,200).
As at the balance sheet date, the company had provided a guarantee over bank loans in the parent company. The maximum extent of this guarantee amounted to £400,000 (2017: n/a) and the company has pledged its freehold land and buildings as security over these bank loans.