Company Registration No. 07728942 (England and Wales)
TROY FOODS (SALADS) LIMITED
FINANCIAL STATEMENTS
FOR THE PERIOD ENDED
2 APRIL 2023
6 Queen Street
Leeds
West Yorkshire
LS1 2TW
TROY FOODS (SALADS) LIMITED
CONTENTS
Page
Strategic report
1 - 2
Directors' report
3 - 4
Directors' responsibilities statement
5
Independent auditor's report
6 - 9
Statement of income and retained earnings
10
Balance sheet
11
Statement of cash flows
12
Notes to the financial statements
13 - 27
TROY FOODS (SALADS) LIMITED
COMPANY INFORMATION
Directors
Mr D Kempley
Mr A Murphy
Mr J Kempley
(Appointed 22 November 2022)
Mr S Clark
(Appointed 29 May 2023)
Company number
07728942
Registered office
Unit 1, Stourton Link
Intermezzo Drive
Leeds
West Yorkshire
LS10 1DF
Auditor
TC Group
6 Queen Street
Leeds
West Yorkshire
LS1 2TW
TROY FOODS (SALADS) LIMITED
STRATEGIC REPORT
FOR THE PERIOD ENDED 2 APRIL 2023
- 1 -
The directors present the strategic report for the Period ended 2 April 2023.
Fair review of the business
The directors present the accounts for the financial year FY23, a shortened year of six months duration. Over the past 18 months the business has been impacted by significant input product price increases due to the inflationary and supply issues principally arising from the post-Covid recovery period and the war in Ukraine which led to two years of losses.
However, in FY23 turnover showed a strong increase (18% on an annualised basis) from the previous financial year with growth coming from the existing ranges of sales of dressed salads to UK supermarkets and mayonnaise through B2B sales. From early 2022 the range was expanded to include the sale of bottled mayonnaise to UK supermarkets, representing a significant step to strengthening the profitability of the business.
Drawing on our expertise in industrial mayonnaise production, this new division of the business supplies own brand retail mayonnaise direct to the supermarket shelf. Supported by a multi-year contract with a major supermarket, sales commenced in February 2022 and grew by 50% in Spring when it became fully operational, and sales have continued to grow.
The directors are excited by the development of this new business opportunity; not only does it cement our relationship with one of our longest standing customers, but the operation is very labour efficient, applying the latest robotic end of line processes, and has significant additional capacity that can be utilised without any expansion in factory square footage.
The improvement in turnover was complimented an improvement in gross profit, rising from 11% to 29% following an easement of the inflationary pressures experienced in FY22. With improved buying prices and supply chain ensuring uninterrupted production and sales, more streamlined factory operations delivering efficiencies and more closely managed overheads all supported by selling prices that more closely align with our costs, the profitability of the business has been restored.
Following the significant cost increases experienced, management entered negotiations with customers in late 2022 to seek sales price support to contribute to the higher input costs. The business was able to agree on various packages, some of which were retrospective, and some of which were forward-looking. This enabled the company to achieve a satisfactory result for the six-month period post year-end, without which the business would have been loss-making. The business’s sales pricing now better reflects the current input price levels and this, together with other measures taken by management to improve business efficiency, has resulted in the company delivering a profit for the six-month period ended 2 April 2023, and for the months thereafter.
With this turn of results the directors decided to change the financial year-end from 30th September to 2nd April 2023, hence shortening the financial period by six months.
We are still established as the leading supplier of dressed salads in the UK to the discount supermarket sector with a good volume of listings and a healthy presence on the shelves with all our customers.
Principal risks and uncertainties
In the opinion of the Directors, the principal risks of the business are financial risk, commodity risk and credit risk, as set out in the Directors' Report.
TROY FOODS (SALADS) LIMITED
STRATEGIC REPORT (CONTINUED)
FOR THE PERIOD ENDED 2 APRIL 2023
- 2 -
Mr D Kempley
Director
1 November 2023
TROY FOODS (SALADS) LIMITED
DIRECTORS' REPORT
FOR THE PERIOD ENDED 2 APRIL 2023
- 3 -
The directors present their annual report and financial statements for the Period ended 2 April 2023.
Principal activities
The principal activity of the company was the production of dressed salads and dips and the manufacture of mayonnaise.
Results and dividends
The results for the Period are set out on page 10.
No ordinary dividends were paid. The directors do not recommend payment of a final dividend.
Directors
The directors who held office during the Period and up to the date of signature of the financial statements were as follows:
Mr D Kempley
Mr A Murphy
Mr N Soutar
(Resigned 9 November 2022)
Mr J Kempley
(Appointed 22 November 2022)
Mr G M Urmston
(Resigned 8 November 2022)
Mr S Clark
(Appointed 29 May 2023)
Financial instruments
Objectives and policies
The company secures working capital from its banking facilities, the main source of which is by way of confidential invoice discounting arrangement. Capital expenditure is funded by hire purchase agreements secured on the assets purchased.
Price risk, credit risk, liquidity risk and cash flow risk
The company enters into customer contracts that are consistent with the seasonality of the business, high season typically running from May through to September. The business is well placed to secure food ingredients on very competitive terms due to the buying power of Troy Foods Limited, a commonly owned vegetable processing company. Packaging is usually bespoke to each customer and forward contracts are in place that ensure stock levels are maintained at suppliers to insure against disruption of supply.
Confidential invoice discounting secures the working capital required by the business. This is considered to be the most appropriate method of funding due to the blue chip nature of the supermarkets, low bad debt risk, short life of our products and therefore low level of credit notes. This offers flexibility for the fluctuations of a seasonal business.
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.
TROY FOODS (SALADS) LIMITED
DIRECTORS' REPORT (CONTINUED)
FOR THE PERIOD ENDED 2 APRIL 2023
- 4 -
Administration of connected company
On 30 November 2022, an entity under the same common ownership as the company, Troy Foods Limited, entered administration.
Up until the date of the administration certain shared operations had been carried out jointly by the company and Troy Foods Limited. The operational separation of these functions was completed soon after the administration date.
An agreement for the financial separation of the two entities with the administrator of Troy Foods Limited, including settlement of the creditor balance owed by the company to Troy Foods Limited, has been reached. This arrangement has not resulted in any overall detrimental impact on the net assets of the company.
In addition, financial guarantees previously given by the company were impacted by the administration of Troy Foods Limited. Further details are disclosed in note 21.
On behalf of the board
Mr D Kempley
Director
1 November 2023
TROY FOODS (SALADS) LIMITED
DIRECTORS' RESPONSIBILITIES STATEMENT
FOR THE PERIOD ENDED 2 APRIL 2023
- 5 -
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.
TROY FOODS (SALADS) LIMITED
INDEPENDENT AUDITOR'S REPORT
TO THE MEMBERS OF TROY FOODS (SALADS) LIMITED
- 6 -
Opinion
We have audited the financial statements of Troy Foods (Salads) Limited (the 'company') for the Period ended 2 April 2023 which comprise the statement of income and retained earnings, the balance sheet, 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 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 2 April 2023 and of its profit for the Period 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 directors' 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 directors 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 directors are 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.
TROY FOODS (SALADS) LIMITED
INDEPENDENT AUDITOR'S REPORT (CONTINUED)
TO THE MEMBERS OF TROY FOODS (SALADS) LIMITED
- 7 -
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' report for the financial Period 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.
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 identified material misstatements in the strategic report and the directors' report.
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 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' responsibilities statement, 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.
Irregularities, including fraud, are instances of non-compliance with laws and regulations. We design procedures in line with our responsibilities, outlined above, to detect material misstatements in respect of irregularities, including fraud. The extent to which our procedures are capable of detecting irregularities, including fraud, is detailed below.
TROY FOODS (SALADS) LIMITED
INDEPENDENT AUDITOR'S REPORT (CONTINUED)
TO THE MEMBERS OF TROY FOODS (SALADS) LIMITED
- 8 -
Extent to which the audit was capable of detecting irregularities, including fraud
The objectives of our audit, in respect of fraud, are: to identify and assess the risks of material misstatement of the financial statements due to fraud; to obtain sufficient appropriate audit evidence regarding the assessed risks of material misstatement due to fraud, through designing and implementing appropriate responses; and to respond appropriately to fraud or suspected fraud identified during the audit. However, the primary responsibility for the prevention and detection of fraud rests with both those charged with governance of the entity and its management.
Our approach was as follows:
We identified areas of laws and regulations that could reasonably be expected to have a material effect on the financial statements from our general commercial and sector experience, and through discussion with the director and other management (as required by auditing standards), and discussed with the director and other management the policies and procedures regarding compliance with laws and regulations;
We considered the legal and regulatory frameworks directly applicable to the financial statements reporting framework (FRS 102 and the Companies Act 2006), relevant tax compliance regulations in the UK, food and hygiene regulations, health and safety regulations and employment law;
We considered the nature of the industry, the control environment and business performance, including key drivers for management's remuneration;
We communicated identified laws and regulations throughout our team and remained alert to any indications of non-compliance throughout the audit;
We considered the procedures and controls that the company has established to address risks identified, or that otherwise prevent, deter and detect fraud; and how senior management monitors those programmes.
Based on this understanding we designed our audit procedures to identify non-compliance with such laws and regulations. Where the risk was considered to be higher, we performed audit procedures to address each identified risk. These procedures included: testing manual journals; reviewing the financial statement disclosures and testing to supporting documentation; performing analytical procedures; and enquiring of management, and were designed to provide reasonable assurance that the financial statements were free from material fraud or error.
Owing to the inherent limitations of an audit, there is an unavoidable risk that we may not have detected some material misstatements in the financial statements, even though we have properly planned and performed our audit in accordance with auditing standards. For example, the further removed non-compliance with laws and regulations (irregularities) is from the events and transactions reflected in the financial statements, the less likely the inherently limited procedures required by auditing standards would identify it. The risk is also greater regarding irregularities occurring due to fraud rather than error, as fraud involves intentional concealment, forgery, collusion, omission or misrepresentation. We are not responsible for preventing non-compliance and cannot be expected to detect all non-compliance with laws and regulations.
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.
TROY FOODS (SALADS) LIMITED
INDEPENDENT AUDITOR'S REPORT (CONTINUED)
TO THE MEMBERS OF TROY FOODS (SALADS) 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.
Steven Williams FCA (Senior Statutory Auditor)
For and on behalf of TC Group
1 November 2023
Statutory Auditor
6 Queen Street
Leeds
West Yorkshire
LS1 2TW
TROY FOODS (SALADS) LIMITED
STATEMENT OF INCOME AND RETAINED EARNINGS
FOR THE PERIOD ENDED 2 APRIL 2023
- 10 -
Period
Year
ended
ended
2 April
2 October
2023
2022
Notes
£
£
Turnover
3
27,174,910
45,876,716
Cost of sales
(19,354,808)
(40,851,084)
Gross profit
7,820,102
5,025,632
Administrative expenses
(5,097,401)
(8,255,989)
Other operating expenses
(290)
Operating profit/(loss)
4
2,722,701
(3,230,647)
Interest receivable and similar income
8
1,500
3,000
Interest payable and similar expenses
9
(201,137)
(477,176)
Profit/(loss) before taxation
2,523,064
(3,704,823)
Tax on profit/(loss)
10
(35,489)
489,119
Profit/(loss) for the financial Period
2,487,575
(3,215,704)
Retained earnings brought forward
(4,411,925)
(1,196,221)
Retained earnings carried forward
(1,924,350)
(4,411,925)
The profit and loss account has been prepared on the basis that all operations are continuing operations.
TROY FOODS (SALADS) LIMITED
BALANCE SHEET
AS AT
2 APRIL 2023
02 April 2023
- 11 -
2023
2022
Notes
£
£
£
£
Fixed assets
Tangible assets
11
5,097,861
5,630,718
Current assets
Stocks
12
1,592,642
2,159,507
Debtors
13
7,233,602
7,922,047
Cash at bank and in hand
117,302
24,615
8,943,546
10,106,169
Creditors: amounts falling due within one year
14
(14,401,125)
(18,130,254)
Net current liabilities
(5,457,579)
(8,024,085)
Total assets less current liabilities
(359,718)
(2,393,367)
Creditors: amounts falling due after more than one year
15
(1,295,846)
(1,749,772)
Net liabilities
(1,655,564)
(4,143,139)
Capital and reserves
Called up share capital
20
1,000
1,000
Own shares
267,786
267,786
Profit and loss reserves
(1,924,350)
(4,411,925)
Total equity
(1,655,564)
(4,143,139)
The financial statements were approved by the board of directors and authorised for issue on 1 November 2023 and are signed on its behalf by:
Mr D Kempley
Director
Company Registration No. 07728942
TROY FOODS (SALADS) LIMITED
STATEMENT OF CASH FLOWS
FOR THE PERIOD ENDED 2 APRIL 2023
- 12 -
2023
2022
Notes
£
£
£
£
Cash flows from operating activities
Cash generated from operations
26
2,539,763
416,839
Investing activities
Purchase of tangible fixed assets
(45,448)
(812,572)
Proceeds on disposal of tangible fixed assets
5,950
18,000
Net cash used in investing activities
(39,498)
(794,572)
Financing activities
Finance income
1,500
3,000
Finance cost
(201,137)
(477,176)
Hire purchase interest paid
(62,458)
(99,618)
Movements on invoice discounting
(1,620,175)
1,291,621
Other loans issued
(136,620)
(303,561)
Payment of finance leases obligations
(388,688)
(314,446)
Net cash (used in)/generated from financing activities
(2,407,578)
99,820
Net increase/(decrease) in cash and cash equivalents
92,687
(277,913)
Cash and cash equivalents at beginning of Period
24,615
302,528
Cash and cash equivalents at end of Period
117,302
24,615
TROY FOODS (SALADS) LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE PERIOD ENDED 2 APRIL 2023
- 13 -
1
Accounting policies
Company information
Troy Foods (Salads) Limited is a private company limited by shares incorporated in England and Wales. The registered office is Unit 1, Stourton Link, Intermezzo Drive, Leeds, West Yorkshire, LS10 1DF.
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 amounts in these financial statements are rounded to the nearest £1.
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
The results for the period and post year end trading are summarised in the Strategic Report. true
The period to 2 April 2023 showed improved results following the losses incurred previous years.
The company has worked with external advisors and funders on its turnaround plan. As part of this exercise detailed forecasts have been prepared for the period to 30 September 2024. These forecasts show profitable trading, positive cash generation and the ability to service scheduled debt repayments.
In assessing going concern, alongside the forecasts the Directors have considered potential downsides arising from risks to achieving the forecast result. These risks include the risk of further commodity price inflation (and the ability to pass this on to customers), customer concentration risk, interest rate changes, and cash flow risks arising from the administration of the company’s previously connected company, Troy Foods Limited (as set out further in note 21 and Directors Report). Whilst acknowledging these risks, the Directors do not consider that these risks create a material uncertainty around going concern based on an assessment of the likelihood and magnitude of these risks occurring.
Accordingly the Directors have prepared the financial statements on a going concern basis, and concluded that no material uncertainty in relation to going concern exists.
1.3
Reporting period
As detailed in the strategic report, in late 2022 management agreed on a number of sales packages with customers. This resulted in the company recording a profit for the six-month period from October 2022 to April 2023, without which the business would have been loss-making. With this turn of results, the directors decided to change the financial year-end from 30th September to 2nd April 2023, hence shortening the financial period by six months.
TROY FOODS (SALADS) LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE PERIOD ENDED 2 APRIL 2023
1
Accounting policies
(Continued)
- 14 -
1.4
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.
When cash inflows are deferred and represent a financing arrangement, the fair value of the consideration is the present value of the future receipts. The difference between the fair value of the consideration and the nominal amount received is recognised as interest income.
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.
1.5
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:
Freehold land and buildings
18%-20% straight line basis
Plant and equipment
10% straight line basis
Fixtures and fittings
25% straight line basis
Motor vehicles
25% straight line basis
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.
1.6
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.
Stocks held for distribution at no or nominal consideration are measured at the lower of cost and replacement cost, adjusted where applicable for any loss of service potential.
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.
1.7
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.
TROY FOODS (SALADS) LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE PERIOD ENDED 2 APRIL 2023
1
Accounting policies
(Continued)
- 15 -
1.8
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.
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 payments 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. Amounts 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.
1.9
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.
1.10
Taxation
The tax expense represents the sum of the tax currently payable and deferred tax.
TROY FOODS (SALADS) LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE PERIOD ENDED 2 APRIL 2023
1
Accounting policies
(Continued)
- 16 -
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.
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.
1.11
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.
1.12
Retirement benefits
Payments to defined contribution retirement benefit schemes are charged as an expense as they fall due.
1.13
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.
TROY FOODS (SALADS) LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE PERIOD ENDED 2 APRIL 2023
1
Accounting policies
(Continued)
- 17 -
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 leases asset are consumed.
1.14
Government grants
Government grants are recognised at the fair value of the asset received or receivable when there is reasonable assurance that the grant conditions will be met and the grants will be received.
A grant that specifies performance conditions is recognised in income when the performance conditions are met. Where a grant does not specify performance conditions it is recognised in income when the proceeds are received or receivable. A grant received before the recognition criteria are satisfied is recognised as a liability.
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 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 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.
TROY FOODS (SALADS) LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE PERIOD ENDED 2 APRIL 2023
2
Judgements and key sources of estimation uncertainty
(Continued)
- 18 -
Key sources of estimation uncertainty
The estimates and assumptions which have a significant risk of causing a material adjustment to the carrying amount of assets and liabilities are as follows.
Useful economic lives of tangible fixed assets
The annual depreciation charge for tangible fixed assets is sensitive to change in the estimated useful economic lives and residual values of the assets. The useful economic lives and residual values are re-assessed annually. They are amended when necessary to reflect current estimates, based on technological advancement, future investments, economic utilisation and the physical condition of the assets. The carrying value of tangible fixed assets is set out in note 11 and the useful economic life of each category of fixed assets is set out in the accounting policy above.
Impairment of trade and other debtors
The Company makes an estimate of the recoverable value of trade and other debtors. When assessing impairment of trade and other debtors, management considers factors including the ageing profile of the debtor balances and historical experience of recoverability. The carrying value of trade debtors and the associated provision is set out in note 13.
Impairment of stocks
The Company sells perishable goods and, as a result, it is necessary to consider the recoverability of the costs of stock and the associated provision required. When considering the requirement for a stock provision, management considers the age of the stock and the anticipated selling price. The carrying value of stocks and the associated provision is set out on note 12.
3
Turnover and other revenue
2023
2022
£
£
Turnover analysed by class of business
Sale of goods
27,115,952
45,876,716
Analysis per statutory database
27,115,952
45,876,716
Statutory database analysis does not agree to the trial balance by:
58,958
-
2023
2022
£
£
Other significant revenue
Interest income
1,500
3,000
Grants received
-
(290)
All turnover arose within the United Kingdom.
TROY FOODS (SALADS) LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE PERIOD ENDED 2 APRIL 2023
- 19 -
4
Operating profit/(loss)
2023
2022
Operating profit/(loss) for the period is stated after charging/(crediting):
£
£
Exchange differences apart from those arising on financial instruments measured at fair value through profit or loss
(8,499)
(2,373)
Government grants
-
290
Fees payable to the company's auditor for the audit of the company's financial statements
8,288
8,500
Depreciation of owned tangible fixed assets
572,355
1,063,518
Operating lease charges
191,664
447,996
5
Auditor's remuneration
2023
2022
Fees payable to the company's auditor and associates:
£
£
For audit services
Audit of the financial statements of the company
8,288
8,500
6
Employees
The average monthly number of persons (including directors) employed by the company during the Period was:
2023
2022
Number
Number
Production
135
92
Other departments
75
67
Total
210
159
Their aggregate remuneration comprised:
2023
2022
£
£
Wages and salaries
3,441,952
5,725,344
Social security costs
364,513
543,408
Pension costs
95,217
160,995
3,901,682
6,429,747
TROY FOODS (SALADS) LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE PERIOD ENDED 2 APRIL 2023
- 20 -
7
Directors' remuneration
2023
2022
£
£
Remuneration for qualifying services
361,071
330,642
Company pension contributions to defined contribution schemes
1,898
3,769
362,969
334,411
The number of directors for whom retirement benefits are accruing under defined contribution schemes amounted to 1 (2022 - 2).
Remuneration disclosed above include the following amounts paid to the highest paid director:
2023
2022
£
£
Remuneration for qualifying services
284,786
113,663
8
Interest receivable and similar income
2023
2022
£
£
Interest income
Interest on bank deposits
1,500
3,000
Investment income includes the following:
Interest on financial assets not measured at fair value through profit or loss
1,500
3,000
TROY FOODS (SALADS) LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE PERIOD ENDED 2 APRIL 2023
- 21 -
9
Interest payable and similar expenses
2023
2022
£
£
Interest on financial liabilities measured at amortised cost:
Interest on bank overdrafts and loans
31,920
208,027
Other interest on financial liabilities
106,759
169,359
138,679
377,386
Other finance costs:
Interest on finance leases and hire purchase contracts
62,458
99,790
201,137
477,176
10
Taxation
2023
2022
£
£
Deferred tax
Recognition of tax losses
35,489
(489,119)
The actual charge/(credit) for the Period can be reconciled to the expected charge/(credit) for the Period based on the profit or loss and the standard rate of tax as follows:
2023
2022
£
£
Profit/(loss) before taxation
2,523,064
(3,704,823)
Expected tax charge/(credit) based on the standard rate of corporation tax in the UK of 19.00% (2022: 19.00%)
479,382
(703,916)
Revaluation of tax losses recognised
35,489
Losses not recognised
214,797
Utilisation of tax losses
(455,594)
Taxation charge/(credit) for the period
59,277
(489,119)
Taxation charge/(credit) in the financial statements
35,489
(489,119)
Reconciliation - the current year tax charge does not reconcile to the above analysis. Please review figures in the database.
23,788
-
TROY FOODS (SALADS) LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE PERIOD ENDED 2 APRIL 2023
- 22 -
11
Tangible fixed assets
Freehold land and buildings
Plant and equipment
Fixtures and fittings
Motor vehicles
Total
£
£
£
£
£
Cost
At 3 October 2022
1,835,965
8,969,743
770,732
62,547
11,638,987
Additions
38,681
6,767
45,448
Disposals
(5,950)
(5,950)
At 2 April 2023
1,835,965
9,002,474
777,499
62,547
11,678,485
Depreciation and impairment
At 3 October 2022
1,314,417
4,029,641
631,734
32,477
6,008,269
Depreciation charged in the Period
138,457
389,602
36,478
7,818
572,355
At 2 April 2023
1,452,874
4,419,243
668,212
40,295
6,580,624
Carrying amount
At 2 April 2023
383,091
4,583,231
109,287
22,252
5,097,861
At 2 October 2022
521,548
4,940,102
138,998
30,070
5,630,718
12
Stocks
2023
2022
£
£
Raw materials and consumables
1,322,659
1,608,547
Finished goods and goods for resale
269,983
550,960
1,592,642
2,159,507
13
Debtors
2023
2022
Amounts falling due within one year:
£
£
Trade debtors
4,731,143
6,059,597
Other debtors
1,804,767
1,136,814
Prepayments and accrued income
258,053
250,508
6,793,963
7,446,919
TROY FOODS (SALADS) LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE PERIOD ENDED 2 APRIL 2023
13
Debtors
(Continued)
- 23 -
2023
2022
Amounts falling due after more than one year:
£
£
Deferred tax asset (note 18)
439,639
475,128
Total debtors
7,233,602
7,922,047
14
Creditors: amounts falling due within one year
2023
2022
Notes
£
£
Obligations under finance leases
17
701,677
698,897
Other borrowings
16
3,352,166
5,014,715
Trade creditors
4,962,400
8,089,266
Taxation and social security
433,092
643,315
Other creditors
1,895,544
2,342,616
Accruals and deferred income
3,056,246
1,341,445
14,401,125
18,130,254
15
Creditors: amounts falling due after more than one year
2023
2022
Notes
£
£
Obligations under finance leases
17
1,295,846
1,749,772
16
Loans and overdrafts
2023
2022
£
£
Amounts due to invoice discounting company
3,352,166
4,972,341
Other loans
42,374
3,352,166
5,014,715
Payable within one year
3,352,166
5,014,715
TROY FOODS (SALADS) LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE PERIOD ENDED 2 APRIL 2023
16
Loans and overdrafts
(Continued)
- 24 -
The other loans and obligations under finance leases and hire purchase contracts relate to specific amounts borrowed to fund the purchase of fixed assets. These amounts are secured against the assets to which they relate.
17
Finance lease obligations
2023
2022
Future minimum lease payments due under finance leases:
£
£
Within one year
684,184
698,897
In two to five years
1,313,339
1,749,772
1,997,523
2,448,669
Finance lease payments represent rentals payable by the company for certain items of plant and machinery. Leases include purchase options at the end of the lease period, and no restrictions are placed on the use of the assets. The average lease term is 3 years. All leases are on a fixed repayment basis and no arrangements have been entered into for contingent rental payments.
18
Deferred taxation
The following are the major deferred tax liabilities and assets recognised by the company and movements thereon:
Assets
Assets
2023
2022
Balances:
£
£
Tax losses
439,639
475,128
2023
Movements in the Period:
£
Asset at 3 October 2022
(475,128)
Charge to profit or loss
35,489
Asset at 2 April 2023
(439,639)
TROY FOODS (SALADS) LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE PERIOD ENDED 2 APRIL 2023
- 25 -
19
Retirement benefit schemes
2023
2022
Defined contribution schemes
£
£
Charge to profit or loss in respect of defined contribution schemes
95,217
160,995
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.
20
Share capital
2023
2022
2023
2022
Ordinary share capital
Number
Number
£
£
Issued and fully paid
Ordinary shares of £1 each
1,000
1,000
1,000
1,000
21
Financial commitments, guarantees and contingent liabilities
On 30 November 2022, Troy Foods Limited (a previously connected company) entered administration. Further details are set out in the Directors Report. Troy Foods (Salads) Limited had guaranteed liabilities of Troy Foods Limited which, at the date of administration, totalled approximately £4,728,661.
The extent to which the guarantee will crystallise in a liability for the company as a result of the administration is not known with certainty at the date of approval of these financial statements as any amount is dependent on other factors including the realisation of assets that are secured against the borrowings of Troy Foods Limited. However, the Directors expect that the final liability will not be significantly detrimental to the business.
22
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:
2023
2022
£
£
Within one year
501,472
735,648
Between two and five years
781,805
1,356,630
1,283,277
2,092,278
TROY FOODS (SALADS) LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE PERIOD ENDED 2 APRIL 2023
- 26 -
23
Related party transactions
JABE Cars Limited
JABE Cars Limited is a company of which D J Kempley is a Director. At the balance sheet date the amount due from JABE Cars Limited was £Nil (2022 - £620,000).
24
Directors' transactions
D J Kempley
During the year the Company received repayments totalling £209,876. As at 2 April 2023, the director owed £927,295 to the Company. No interest was charged on this balance
25
Ultimate controlling party
The ultimate controlling party is D J Kempley.
26
Cash generated from operations
2023
2022
£
£
Profit/(loss) for the Period after tax
2,487,575
(3,215,704)
Adjustments for:
Taxation charged/(credited)
35,489
(489,119)
Finance costs
201,137
477,176
Investment income
(1,500)
(3,000)
Depreciation and impairment of tangible fixed assets
572,355
1,063,518
Movements in working capital:
Decrease/(increase) in stocks
566,865
(1,355,623)
Decrease/(increase) in debtors
652,956
(305,680)
(Decrease)/increase in creditors
(1,975,114)
4,245,271
Cash generated from operations
2,539,763
416,839
TROY FOODS (SALADS) LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE PERIOD ENDED 2 APRIL 2023
- 27 -
27
Analysis of changes in net debt
3 October 2022
Cash flows
2 April 2023
£
£
£
Cash at bank and in hand
24,615
92,687
117,302
Borrowings excluding overdrafts
(5,014,715)
1,662,549
(3,352,166)
Obligations under finance leases
(2,448,669)
451,146
(1,997,523)
(7,438,769)
2,206,382
(5,232,387)
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