Registered number: 13179628
MERCHANT GOURMET LIMITED
ANNUAL REPORT AND FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 APRIL 2023
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COMPANY INFORMATION
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CLA Evelyn Partners Limited
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Chartered Accountants & Statutory Auditor
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CONTENTS
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Directors' Responsibilities Statement
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Independent Auditor's Report
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Statement of Comprehensive Income
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Statement of Financial Position
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Statement of Changes in Equity
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Notes to the Financial Statements
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STRATEGIC REPORT
FOR THE YEAR ENDED 30 APRIL 2023
The directors present their Strategic Report for the Company for the year ended 30 April 2023.
Merchant Gourmet Limited is the market leader in the supply of ready to eat grains, pulses and chestnuts into the UK grocery market. We source our products through a network of co-manufacturers with whom we have strong long-term relationships. We exist to inspire more people to eat more plants in a convenient, everyday gourmet way.
Our heritage is in our relentless pursuit of high-quality, convenient food products that we source from across the Globe. We work closely with our supply partners developing new products and overseeing the technical and production processes. This is then delivered through an end-to-end supply chain that sets the highest standards in integrity and food safety.
Operating out of various third-party distribution centres in the UK, we supply Plant based products principally in the UK, under the Merchant Gourmet brand.
Basis of preparation of financial statements
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The Company’s financial statements have been prepared in accordance with Financial Reporting Standard 102 (FRS 102).
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Year ended 30 April 2023
£'000
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15-month period ended 30 April 2022
£'000
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On 1 July 2021 we formally demerged from Leathams Group Holdings Ltd when we commenced trading. The results above for 2022 represent the 15-month period from date of incorporation, 4th February 2021. However, for the first five months of that period the company was dormant, and therefore the results represent only 10 months of actual trade. The results for 2023 represent a full year of trade.
Whilst we endured another very challenging year of unprecedented market conditions, we grew both revenue and profit year on year. We successfully built on the investments we made last year in both talent acquisition and marketing. Merchant Gourmet has continued to benefit from the enduring trends of people eating less meat in favour of more "veg-forward" diets and also looking to do so in a healthy but convenient way. We expect these trends to continue into the future.
Our continued investment strategy behind marketing has seen us grow both UK household penetration and also our purchase frequency. Our investment in the team has also helped us grow distribution points across the UK grocery retail estate and increase our rate of sale.
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STRATEGIC REPORT (CONTINUED)
FOR THE YEAR ENDED 30 APRIL 2023
EBITDA is defined as Operating profit plus depreciation, amortisation and exceptional items. The results, show Net sales as £16,091,362 (15-month period ended 30 April 2022 - £13,234,573) and EBITDA of £451,874 (15-month period ended 30 April 2022 - £224,507). Despite challenging market conditions these results show growth in sales, gross margin and profit vs last financial year and reflect the continued higher investment in the brand. Raw material product costs were materially higher year on year driven by disrupted supply chains and higher energy prices. We have also had to navigate the broader crisis in consumer confidence and adverse pressure on exchange rates. All of these issues impacted our ability to deliver a true breakthrough in growth and profit.
Despite these headwinds, management have put mitigating actions in place to ensure we are in a strong position to deal with any further inflation or market volatility. We also expect these measures to deliver improved profitability in the next financial year.
In addition, we have made a further investment choice in building a strong innovation pipeline which lays down the foundations for more significant growth in future years. This is a key investment pillar for future business success.
Based on the above, we expect the Company to remain in growth in both revenue and profit delivery for the coming year.
Principal risks and uncertainties
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The Company gives appropriate consideration to risk management objectives and policies. Over and above the general economic climate, the main risks facing the business are Supplier Performance, Food Safety, Foreign Currency, Credit Risk, Liquidity and Interest Rates.
Supplier Performance
A key component of the Company's activities revolves around its supply base. With a range of products, the Company has actively focused on establishing a diverse supplier portfolio, therefore minimising the risk to the Company in relation to continuity of supply. Dual supplier strategies are in place for core product lines and all suppliers are reviewed formally at least once a year to maximise supply performance. No one supplier represents more than 36.1% (15-month period ended 30 April 2022 - 32.0%) of purchases.
Price Risk
The Company is exposed to raw material price increases and logistics inflation through its inbound freight and outbound distribution activities. Fixed price contracts are negotiated with suppliers where possible to mitigate the impact of food inflation. We also look to offset price increases wherever possible, through alternative sourcing and seasonal bulk purchasing.
Customer Base
The Company operates an omni-channel strategy: selling in to all the major grocery multiples, our own ecommerce shop, pureplay e-commerce, discounters, and wholesale. This minimises the impact from the loss of any one single customer. No single customer representing more than 37.4% (15-month period ended 30 April - 33.2%) of turnover.
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STRATEGIC REPORT (CONTINUED)
FOR THE YEAR ENDED 30 APRIL 2023
Food Safety
As food legislation continues to increase and the demands from our customer base grow in response, our in-house technical team have proven themselves to be an extremely effective resource. The Company operates within the highest industry technical standards and applies these demanding safety standards to its supply base. Our supplier auditing programme and technical competency has enabled the Company to maintain a positive reputation within the industry post demerger.
Foreign Currency
As 69.0% (15-month period ended 30 April 2022 - 69.6%) of our food purchases are bought in foreign currencies, we remain at risk from fluctuations in exchange rates, specifically Euro and US Dollar. At present we aim to hedge this position and the Company holds foreign currency cash reserves as at 30 April 2023, to the equivalent of £1.07m (2022 - £0.66m).
Credit Risk
Credit risk is managed through the adoption of rigorous credit control procedures in addition to external credit insurance. The directors feel this is the most appropriate approach to the current economic climate.
Liquidity Risk and Interest Rates
Committed bank facilities are in place to deal with cash flows, liquidity risk and planned expansion.
Financial Key Performance Indicators
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The business is constantly reviewing its financial and operational performance in many areas, to aid decision making and improve performance. These areas include Turnover Growth and New Business, Gross Profit, Supplier Performance, Customer Service, Overhead Management, Cash Management, Employee Retention, Environmental Performance and Return on Investment. Our KPI’s are shown below:
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Year ended 30 April 2023
£'000
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15-month period ended 30 April 2022
£'000
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Return on Capital Employed ("ROCE")
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ROCE definition
Earnings before interest and tax (EBIT)/ Net Assets
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STRATEGIC REPORT (CONTINUED)
FOR THE YEAR ENDED 30 APRIL 2023
This report was approved by the board and signed on its behalf.
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DIRECTORS' REPORT
FOR THE YEAR ENDED 30 APRIL 2023
The directors present their report and the financial statements for the year ended 30 April 2023.
The profit for the year, after taxation, amounted to £285,093 (15-month period ended 30 April 2022 - £173,757).
No dividends were declared or paid during the year (15-month period ended 30 April 2022 - £Nil).
The directors who served during the year were:
Disclosure of information to auditor
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Each of the persons who are directors at the time when this Directors' Report is approved has confirmed that:
∙so far as the director is aware, there is no relevant audit information of which the Company's auditor is unaware, and
∙the director has taken all the steps that ought to have been taken as a director in order to be aware of any relevant audit information and to establish that the Company's auditor is aware of that information.
Events after the end of the reporting period
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There have been no significant events affecting the Company since the year end.
The auditor, CLA Evelyn Partners Limited, will be proposed for reappointment in accordance with section 485 of the Companies Act 2006.
This report was approved by the board and signed on its behalf.
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DIRECTORS' RESPONSIBILITIES STATEMENT
FOR THE YEAR ENDED 30 APRIL 2023
The directors are responsible for preparing the Strategic Report, the Directors' 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 applicable law and United Kingdom Accounting Standards (United Kingdom Generally Accepted Accounting Practice), including Financial Reporting Standard 102 ‘The Financial Reporting Standard applicable in the UK and Republic of Ireland'. Under company law the directors must not approve the financial statements unless they are satisfied that they give a true and fair view of the state of affairs of the Company and 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 for the Company's financial statements and then apply them consistently;
∙make judgements and accounting estimates that are reasonable and prudent; and
∙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 to enable them to ensure that the financial statements comply with the Companies Act 2006. They are also responsible for safeguarding the assets of the Company and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.
The directors are responsible for the maintenance and integrity of the corporate and financial information included on the Company's website. Legislation in the United Kingdom governing the preparation and dissemination of financial statements and other information included in Directors' Reports may differ from legislation in other jurisdictions.
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INDEPENDENT AUDITOR'S REPORT TO THE MEMBERS OF MERCHANT GOURMET LIMITED
Opinion
We have audited the financial statements of Merchant Gourmet Limited (the 'Company') for the year ended 30 April 2023 which comprise the Statement of Comprehensive Income, the Statement of Financial Position, the Statement of Changes in Equity and the 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 30 April 2023 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.
Basis for opinion
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.
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INDEPENDENT AUDITOR'S REPORT TO THE MEMBERS OF MERCHANT GOURMET LIMITED (CONTINUED)
Other information
The other information comprises the information included in the Annual Report and Financial Statements, other than the financial statements and our auditor’s report thereon. The directors are responsible for the other information contained within the Annual Report and Financial Statements. 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.
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Opinions on other matters prescribed by the Companies Act 2006
In our opinion, based on the work undertaken in the course of the audit:
∙the information given in the Strategic Report and the Directors’ Report for the financial year for which the financial statements are prepared is consistent with the financial statements; and
∙the Strategic Report and the Directors’ Report have been prepared in accordance with applicable legal requirements.
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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 or the Directors’ Report.
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We have nothing to report in respect of the following matters in relation to which the Companies Act 2006 requires us to report to you if, in our opinion:
∙adequate accounting records have not been kept, or returns adequate for our audit have not been received from branches not visited by us; or
∙the financial statements are not in agreement with the accounting records and returns; or
∙certain disclosures of 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’ Responsibilities Statement set out on page 5, 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.
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INDEPENDENT AUDITOR'S REPORT TO THE MEMBERS OF MERCHANT GOURMET LIMITED (CONTINUED)
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:
We obtained a general understanding of the company’s legal and regulatory framework through enquiry of management in respect of their understanding of the relevant laws and regulations. We obtained an understanding of the entity’s policies and procedures in relation to compliance with relevant laws and regulations. We also drew on our existing understanding of the Company’s industry and regulation.
We understand that the Company complies with requirements of the framework through:
∙Requiring all employees to read and follow the policies as per the employee handbook and procedures of the business.
∙Close oversight by the directors and key management, meaning that any legislation or claims would come to their attention directly
In the context of the audit, we considered those laws and regulations which determine the form and content of the financial statements and which are central to the Company’s ability to conduct its business and where failure to comply could result in material penalties. We have identified the following laws and regulations as being of significance in the context of the Company:
∙Companies Act 2006, in respect of preparation and presentation of the financial statements; and
∙FRS 102, in respect of preparation and presentation of the financial statements.
We performed the following specific procedures to gain evidence about compliance with the significant laws and regulations above:
∙Making enquiries of management and those charged with governance as to the risks of non-compliance and any instance thereof;
∙Obtained written management representations regarding disclosure of any non-compliance with laws and regulations; and
∙Review of minutes of meeting of those charged with governance.
The senior statutory auditor led a discussion with all members of the engagement team regarding the susceptibility of the Company’s financial statements to material misstatement, including how fraud might occur. The key areas identified as part of the discussion were with regard to manipulation of the financial statements through manual journal entries and incorrect recognition of revenue.
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INDEPENDENT AUDITOR'S REPORT TO THE MEMBERS OF MERCHANT GOURMET LIMITED (CONTINUED)
The procedures carried out to gain evidence in the above areas included:
∙Testing journal entries, selected based on specific risk assessments applied based on client processes and controls surrounding manual journals;
∙Testing the cut-off of revenue, specifically around the statement of financial position date; and
∙Evaluation of the design effectiveness of management's controls designed to prevent and detect irregularities.
A further description of our responsibilities is available on the Financial Reporting Council’s website at: 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.
Nicholas Jacques (Senior Statutory Auditor)
for and on behalf of
CLA Evelyn Partners Limited
Chartered Accountants
Statutory Auditor
45 Gresham Street
London
EC2V 7BG
23 November 2023
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STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEAR ENDED 30 APRIL 2023
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15-month period ended
30 April
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Interest payable and similar expenses
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Profit for the financial year
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There was no other comprehensive income for the year ended 30 April 2023 (15-month period ended 30 April 2022 - £Nil).
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The notes on pages 14 to 26 form part of these financial statements.
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MERCHANT GOURMET LIMITED
REGISTERED NUMBER:13179628
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STATEMENT OF FINANCIAL POSITION
AS AT 30 APRIL 2023
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Debtors: amounts falling due within one year
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Creditors: amounts falling due within one year
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The financial statements were approved and authorised for issue by the board and were signed on its behalf by:
The notes on pages 14 to 26 form part of these financial statements.
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STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 30 APRIL 2023
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Comprehensive income for the 15-month period
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Profit for the 15-month period
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Contributions by and distributions to owners
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Shares issued during the period
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Comprehensive income for the year
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NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 APRIL 2023
Merchant Gourmet Limited is a private company, limited by shares, domicile and incorporated in England and Wales (registered number: 13179628). The registered office address is Unit 10-12 The Circle, Queen Elizabeth Street, London, SE1 2JE.
The Company was incorporated on 9 February 2021 and the first financial statements covered the 15- month period from incorporation to 30 April 2022. For this reason, amounts in these financial statements may not be fully comparable.
2.Accounting policies
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Basis of preparation of financial statements
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The financial statements have been prepared under the historical cost convention unless otherwise specified within these accounting policies and in accordance with Financial Reporting Standard 102, the Financial Reporting Standard applicable in the UK and the Republic of Ireland and the Companies Act 2006.
The preparation of financial statements in compliance with FRS 102 requires the use of certain critical accounting estimates. It also requires management to exercise judgement in applying the Company's accounting policies (see note 3).
The following principal accounting policies have been applied:
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Financial Reporting Standard 102 - reduced disclosure exemptions
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The Company has taken advantage of the following disclosure exemptions in preparing these financial statements, as permitted by the FRS 102 "The Financial Reporting Standard applicable in the UK and Republic of Ireland":
∙the requirements of Section 7 Statement of Cash Flows;
∙the requirements of Section 3 Financial Statement Presentation paragraph 3.17(d);
∙the requirements of Section 33 Related Party Disclosures paragraph 33.7.
This information is included in the consolidated financial statements of Merchant Gourmet Holdings Limited as at 30 April 2023 and these financial statements may be obtained from Companies House.
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NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 APRIL 2023
2.Accounting policies (continued)
The financial statements have been prepared on a going concern basis. At the year ended, the Company has net assets of £2,341,081 (2022 - £2,055,988) and net current assets of £2,295,765 (2022 - £1,990,402). The Company has been profitable in the current period. Management expect this to continue for the foreseeable future.
The directors prepare a forecast covering a period of more than 12 months post the signing of these financial statements, considering various scenarios for revenue and expenditure. Their decisions are based on a prudent and realistic assessment of the economic outlook which allows them to steer the direction of the Company. The Company's operations are expected to maintain a strong cash position, and based on forward projections, they believe that it is appropriate to apply the going concern assumption.
The directors have a reasonable expectation that the Company has adequate resources to continue in operational existence for the foreseeable future being at least the next 12 months from signing of these financial statements.
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Foreign currency translation
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Functional and presentation currency
The Company's functional and presentational currency is GBP.
Transactions and balances
Foreign currency transactions are translated into the functional currency using the spot exchange rates at the dates of the transactions.
At each period end foreign currency monetary items are translated using the closing rate. Non-monetary items measured at historical cost are translated using the exchange rate at the date of the transaction and non-monetary items measured at fair value are measured using the exchange rate when fair value was determined.
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NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 APRIL 2023
2.Accounting policies (continued)
Turnover is recognised to the extent that it is probable that the economic benefits will flow to the Company and the turnover can be reliably measured. Turnover is measured as the fair value of the consideration received or receivable, excluding discounts, rebates, value added tax and other sales taxes. The following criteria must also be met before turnover is recognised:
Sale of goods
Turnover from the sale of goods is recognised when all of the following conditions are satisfied:
∙the Company has transferred the significant risks and rewards of ownership to the buyer;
∙the Company retains neither continuing managerial involvement to the degree usually associated with ownership nor effective control over the goods sold;
∙the amount of turnover can be measured reliably;
∙it is probable that the Company will receive the consideration due under the transaction; and
∙the costs incurred or to be incurred in respect of the transaction can be measured reliably.
The directors deem this to be when the goods are delivered to the customer.
Finance costs are charged to profit or loss over the term of the debt using the effective interest method so that the amount charged is at a constant rate on the carrying amount. Issue costs are initially recognised as a reduction in the proceeds of the associated capital instrument.
Defined contribution pension plan
The Company operates a defined contribution plan for its employees. A defined contribution plan is a pension plan under which the Company pays fixed contributions into a separate entity. Once the contributions have been paid the Company has no further payment obligations.
The contributions are recognised as an expense in profit or loss when they fall due. Amounts not paid are shown in accruals as a liability in the Statement of Financial Position. The assets of the plan are held separately from the Company in independently administered funds.
Intangible assets are initially recognised at cost. After recognition, under the cost model, intangible assets are measured at cost less any accumulated amortisation and any accumulated impairment losses.
All intangible assets are considered to have a finite useful life. If a reliable estimate of the useful life cannot be made, the useful life shall not exceed ten years.
The estimated useful lives range as follows:
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3 years on a straight-line basis
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NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 APRIL 2023
2.Accounting policies (continued)
Tangible fixed assets under the cost model are stated at historical cost less accumulated depreciation and any accumulated impairment losses. Historical cost includes expenditure that is directly attributable to bringing the asset to the location and condition necessary for it to be capable of operating in the manner intended by management.
Depreciation is charged so as to allocate the cost of assets less their residual value over their estimated useful lives, using the straight-line method.
Depreciation is provided on the following basis:
The assets' residual values, useful lives and depreciation methods are reviewed, and adjusted prospectively if appropriate, or if there is an indication of a significant change since the last reporting date.
Gains and losses on disposals are determined by comparing the proceeds with the carrying amount and are recognised in profit or loss.
Stocks are stated at the lower of cost and net realisable value, being the estimated selling price less costs to complete and sell. Cost is based on the cost of purchase on a first in, first out basis. Work in progress and finished goods include labour and attributable overheads.
At each reporting date, stocks are assessed for impairment. If stock is impaired, the carrying amount is reduced to its selling price less costs to complete and sell. The impairment loss is recognised immediately in profit or loss.
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Provisions for liabilities
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Provisions are made where an event has taken place that gives the Company a legal or constructive obligation that probably requires settlement by a transfer of economic benefit, and a reliable estimate can be made of the amount of the obligation.
Provisions are charged as an expense to profit or loss in the year that the Company becomes aware of the obligation, and are measured at the best estimate at the reporting date of the expenditure required to settle the obligation, taking into account relevant risks and uncertainties.
When payments are eventually made, they are charged to the provision carried in the Statement of Financial Position.
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NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 APRIL 2023
2.Accounting policies (continued)
Financial assets and financial liabilities are recognised in the Statement of Financial Position when the Company becomes a party to the contractual provisions of the instrument.
Trade and other debtors and creditors are classified as basic financial instruments and measured on initial recognition at transaction price. Debtors and creditors are subsequently measured at amortised cost using the effective interest rate method. A provision is established when there is objective evidence that the Company will not be able to collect all amounts due.
Cash and cash equivalents are classified as basic financial instruments and comprise cash in hand and at bank, short-term bank deposits with an original maturity of three months or less and bank overdrafts which are an integral part of the Company’s cash management.
Financial liabilities and equity instruments issued by the Company are classified in accordance with the substance of the contractual arrangements entered into and the definitions of a financial liability and an equity instrument. An equity instrument is any contract that evidences a residual interest in the assets of the Company after deducting all of its liabilities. Equity instruments issued by the Company are recorded at the proceeds received, net of direct issue costs.
Interest bearing bank loans, overdrafts and other loans which meet the criteria to be classified as basic financial instruments are initially recorded at the present value of cash payable to the bank, which is ordinarily equal to the proceeds received net of direct issue costs. These liabilities are subsequently measured at amortised cost, using the effective interest rate method.
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Current and deferred taxation
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The tax expense for the year comprises current and deferred tax. Tax is recognised in profit or loss except that a charge attributable to an item of income and expense recognised as other comprehensive income or to an item recognised directly in equity is also recognised in other comprehensive income or directly in equity respectively.
The current income tax charge is calculated on the basis of tax rates and laws that have been enacted or substantively enacted by the reporting date in the countries where the Company operates and generates income.
Deferred tax balances are recognised in respect of all timing differences that have originated but not reversed by the reporting date, except that:
∙The recognition of deferred tax assets is limited to the extent that it is probable that they will be recovered against the reversal of deferred tax liabilities or other future taxable profits; and
∙Any deferred tax balances are reversed if and when all conditions for retaining associated tax allowances have been met.
Deferred tax balances are not recognised in respect of permanent differences except in respect of business combinations, when deferred tax is recognised on the differences between the fair values of assets acquired and the future tax deductions available for them and the differences between the fair values of liabilities acquired and the amount that will be assessed for tax. Deferred tax is determined using tax rates and laws that have been enacted or substantively enacted by the reporting date.
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NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 APRIL 2023
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Judgements in applying accounting policies and key sources of estimation uncertainty
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Estimates and judgements are evaluated at each reporting date and are based on historical experience adjusted for current market conditions and other factors. Management makes estimates and assumptions concerning the future in preparing the financial statements and the actual results will not always reflect the accounting estimates made. The estimates and assumptions that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities of the Company are outlined below.
Stock Provision
The Company has stock totalling £1,615,420 (2022 - £2,506,104) at the statement of financial position date. In assessing the magnitude of stock provision required at the year end, the directors have reviewed the products with regard to their current condition, their remaining life, along with recent and expected future sales patterns. The value of the provision as at the year end was £152,604 (2022 - £151,140).
The whole of the turnover is attributable to the Company's principal activity.
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All turnover arose within the United Kingdom.
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The operating profit is stated after charging:
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15-month period ended
30 April
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15-month period ended
30 April
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Fees payable to the Company's auditor and its associates for the audit of the Company's annual financial statements
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NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 APRIL 2023
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Staff costs, including directors' remuneration, were as follows:
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15-month period ended
30 April
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Cost of defined contribution scheme
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The average monthly number of employees, including the directors, during the year was 13 (15-month period ended 30 April 2022 - 11).
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15-month period ended
30 April
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The highest paid director received remuneration of £230,825 (2022 - £198,328).
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Interest payable and similar expenses
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15-month period ended
30 April
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Related party interest payable
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NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 APRIL 2023
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15-month period ended
30 April
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Current tax on profits for the year
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Adjustments in respect of previous periods
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Origination and reversal of timing differences
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Adjustments in respect of previous periods
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Taxation on profit on ordinary activities
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Factors affecting tax charge for the year/period
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The tax assessed for the year/period is higher than (2022 - lower than) the standard rate of corporation tax in the UK of 19.49% (2022 -19%). The differences are explained below:
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15-month period ended
30 April
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Profit on ordinary activities before tax
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Profit on ordinary activities multiplied by standard rate of corporation tax in the UK of 19.49%(2022 -19%)
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Expenses not deductible for tax purposes
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Adjustments to tax charge in respect of prior periods
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Adjustments to tax charge in respect of prior periods - deferred tax
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Remeasurement of deferred tax for changes in tax rates
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Total tax charge for the year/period
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NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 APRIL 2023
10.Taxation (continued)
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Factors that may affect future tax charges
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Finance Act 2021 includes legislation to increase the main rate of corporation tax from 19% to 25% from 1 April 2023. The full anticipated effect of these changes is reflected in the above deferred tax balances.
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NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 APRIL 2023
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Finished goods and goods for resale
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NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 APRIL 2023
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Amounts owed by group undertakings
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Prepayments and accrued income
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Cash and cash equivalents
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Creditors: Amounts falling due within one year
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Other taxation and social security
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Accruals and deferred income
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The sales finance facility disclosed above has been secured by HSBC via fixed and floating charges over the assets of the Company.
The Company has a guarantee in favour of HMRC for £60,000.
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NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 APRIL 2023
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Charged to profit or loss
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Deferred tax asset at end of year
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The deferred tax asset is made up as follows:
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Fixed asset timing differences
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Short-term timing differences
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Fixed asset timing differences are expected to reverse in line with each corresponding fixed asset class and the classes depreciation rates, as noted in the accounting policies.
Short-term timing differences are expected to reverse over the next 12 months.
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Allotted, called up and fully paid
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Ordinary shares of £1.00 each
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On incorporation, 1 ordinary share with a nominal value of £1.00 was issued.
The Ordinary shares have attached to them full voting, dividend and capital distribution rights.
On 1 July 2021, the Company formally demerged from the Leathams Group and was subsequently acquired by Merchant Gourmet Holdings Limited. This was accounted for under merger accounting. 99 shares were issued for the acquisition of trade and assets from Leathams Group for £19,012.42 per share, giving rise to £1,882,131 in share premium.
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NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 APRIL 2023
Share premium account
The share premium account is used to record the aggregate amount or value of premiums paid when the Company's shares are issued at an amount in excess of nominal value.
Profit and loss account
This reserve relates to the cumulative retained earnings less amounts distributed to shareholders.
The Company operates a defined contributions pension scheme. The assets of the scheme are held separately from those of the Company in an independently administered fund. The pension cost charge represents contributions payable by the Company to the fund and amounted to £43,525 (15-month period ended 30 April 2022 - £16,693). Contributions totalling £6,140 (2022 - £4,290) were payable to the fund at the reporting date and are included in creditors.
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Related party transactions
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The Company has taken advantage of the exemption in FRS 102 Section 33.1A to not disclose transactions with wholly owned group entities.
During the year, the Company provided services and stock totalling £276,438 (15-month period ended 30 April 2022 - £99,426) to Leathams Limited, a company owned by the same shareholders as the Company. During the year, the Company received services and stock totalling £1,278,552 (15-month period ended 30 April 2022 - £2,704,171) from Leathams Limited. Amounts due to Leathams Limited at the year end were £45,685 (15-month period ended 30 April 2022 - £71,377 due from). Amounts owed are interest free and repayable on demand.
During the year, the Company was loaned £1,900,000 (15-month period ended 30 April 2022 - £Nil) by Leathams Limited. Interest is charged on this loan at the Bank of England Base Rate plus 2.0%. This amount was repaid in full prior to the year end.
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The immediate and ultimate parent undertaking is Merchant Gourmet Holdings Limited, a company registered in England and Wales.
The smallest and largest group of undertakings for which group accounts for the year ending 30 April 2023 have been drawn up, is that headed by Merchant Gourmet Holdings Limited. The registered office address of Merchant Gourmet Holdings Limited is Unit 10-12 The Circle, Queen Elizabeth Street, London, SE1 2JE. Copies of the group accounts are available from Companies House.
The directors do not consider there to be an ultimate controlling party.
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