Hatch Brothers Limited
Financial Statements
31 August 2023
Company Registration Number: NI640138
Hatch Brothers Limited
Financial Statements
Year ended 31 August 2023
Contents
Page
Officers and professional advisers 1
Director's report 2
Strategic report 4
Independent auditor's report to the members 8
Income statement 14
Statement of comprehensive income 15
Statement of financial position 16
Statement of changes in equity 17
Statement of cash flows 18
Notes to the financial statements 19
Hatch Brothers Limited
Officers and Professional Advisers
Director Mr P M Allen
Auditors William Wilson
Chartered Accountants & Registered Auditor
25 Shore Road
Holywood
BT18 9HX
Registered office Genesis Bakery
31 Aughrim Road
Magherafelt
Northern Ireland
BT45 6BB
Bankers Danske Bank
PO Box 183
Donegall Square West
Belfast
BT1 6JS
Hatch Brothers Limited
Director's Report
Year ended 31 August 2023
The director presents his report and financial statements for the year ended 31 August 2023.
Directors
The following persons served as directors during the year:
Mr P M Allen
Dividends
No dividends were paid during the year. The director does not recommend the payment of a final dividend.
Director's responsibilities
The director is responsible for preparing the report and financial statements in accordance with applicable law and regulations.
Company law requires the director to prepare financial statements for each financial year. Under that law the director has elected to prepare the financial statements in accordance with United Kingdom Generally Accepted Accounting Practice (Financial Reporting Standard 102 and applicable law). Under company law the directors of a company 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 director is required to:
select suitable accounting policies and then apply them consistently;
make judgements and 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 director is responsible for keeping adequate accounting records that are sufficient to show and explain the company's transactions and disclose with reasonable accuracy at any time the financial position of the company and enable him to ensure that the financial statements comply with the Companies Act 2006. He is also responsible for safeguarding the assets of the company and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.
Disclosure of information to auditors
The director confirms that:
so far as he is aware, there is no relevant audit information of which the company's auditor is unaware; and
he has taken all the steps that he ought to have taken as a director in order to make himself aware of any relevant audit information and to establish that the company's auditor is aware of that information.
Employment of disabled persons
The company gives full consideration to applications for employment from disabled persons where the requirements of the job can be adequately fulfilled by a disabled person.

Where existing employees become disabled it is company policy that, wherever practicable, to provide continuing employment and adaptations under normal terms and conditions, and to provide training, career development and promotion to disabled employees where appropriate.
Employee involvement
During the year the policy of providing employees with information about the company has been continued.

Regular meetings are held to allow the free flow of information and ideas through several employee welfare forum groups, covering all departments and shifts, which meet monthly.
This report was approved by the board on 26 January 2024 and signed on its behalf.
Mr P M Allen
Director
Registered office:
Genesis Bakery
31 Aughrim Road
Magherafelt
Northern Ireland
BT45 6BB
Hatch Brothers Limited
Strategic Report
Year ended 31 August 2023
Introduction
The director presents his strategic report of the company for the year ended 31 August 2023.
Principal Activities
The principal activity of the company was the manufacture and distribution of products within the bakery industry.
Business Review
Hatch Brothers Limited ("the Company") trades as "Genesis Bakery" in the United Kingdom and Republic of Ireland. The Company supplies a range of "Genesis" branded and retailer branded products including Irish breads, tarts, cupcakes and seasonal items such as mince pies.

Net sales were £22.9m, an increase of £1.3m/6% on the prior year. Gross profit was £5.4m, an increase of £0.6m/12% on the prior year. The operating profit was £0.97m (prior year £0.4m) after charging depreciation of owned and leased assets of £0.7m (prior year £0.7m). In addition, the company has seen an increasingly strong performance at EBITDA level since the acquisition of the business from Administration in August 2018. The business held cash at year end of £0.3m (prior year £0.7m) and bank loans continue to be repaid in line with agreed terms. The debt associated with the original acquisition of the business was repaid in full in the second half of 2023.

The business paid total wages, salaries and benefits to employees of £7.8m across an average 259 employees, (full and part time), with an average workforce of circa 171 full-time equivalents. The business also employs additional personnel for short periods of time, through a number of employment agencies.

The director has loaned £0.096m to the Company.

The Company insures all debtor balances.
The Company continues to focus on the core business of bakery manufacture and distribution and seeks to work in partnership with all stakeholders to maximise operating efficiencies and promote innovation. During the year under review, the business launched a number of truly innovative products, at foot of significant research and development. Some of these products, retailed under customers’ own brands, have won awards and have gone on to sell in stores worldwide.
The business is profitable, cash generative and continues to invest for the long-term growth of the company. The majority of investment has been in training, equipment and fleet. The fleet has increased with the purchase of several new vehicles, including some which are electric. New pieces of machinery have increased productivity and reduced the need for several repetitive tasks, which has brought benefits by cutting required hours, which is essential in what is currently a very challenging labour market.
Principal risks and uncertainties
The Company's strategy is to follow an appropriate risk policy which effectively manages identified exposures related to the achievement of business objectives.

The Company uses financial instruments within the business. The core risks associated with these include currency risk, interest rate risk, credit risk and liquidity risk. The director reviews and agrees policies for the prudent management of these risks as follows:

Currency risk - the Company's main activities are conducted in the UK. A proportion of sales are in the Republic of Ireland and these are invoiced in Euro. This results in low levels of currency transaction risk which the Company seeks to match against any Euro denominated purchases when possible. Any subsequent costs are reflected in the profit and loss account as they arise.

Finance & Interest Rate risk - the Company's loans are all interest-bearing at rates linked to the Bank of England base rate. Interest is paid as it falls due. The objective set is to minimise the impact of interest-rate volatility.
Liquidity & Cashflow risk - the Company's objective is to maintain a balance between the continuity of funding and flexibility through the use of borrowings with a range of maturities. The Company's policy is to ensure that sufficient resources are available from cash balances, cashflows and near-cash, liquid investments to ensure obligations can be met when they fall due.

Credit risk - the Company extends credit facilities to customers. Customers are subject to strict verification procedures in advance of credit being awarded and are continually monitored. The Company utilises credit insurance to mitigate any potential loss.
Customer risk - the Company tries to ensure that it has a wide base of customers to ensure that there is no concentration of sales. Contract renewal is spread and product type is varied. The company has actively sought out new customers and contracts through the year and has been successful in widening both the customer and product bases, while also making better, more efficient use of both plant and equipment as a result.
Brexit risk - the Company both imports and exports to Great Britain, the Republic of Ireland and, to a limited extent, the wider European Union. The director continues to monitor the situation closely with regard to raw material supply and product sales now that Great Britain has left the EU Customs area while Northern Ireland has remained within the EU Customs area under the Northern Ireland protocol. New supply chain management protocols have been developed and the company now retains more raw materials and work in progress both on site and in frozen storage in order to avoid shorting customer orders. The company continues to invest in resources to monitor movements in commodity prices, particularly where they impact key ingredients such as butter and flour, both of which have been affected by recent events in Ukraine. This has led to changes in procurement in order to maintain security of supply for production and therefore for customers. Where possible, long-term contracts are agreed for raw materials in order to provide stability and security.
Climate risk - the Company, being in the manufacturing industry, faces increasing challenges associated with environmental and social externalities attributed to product manufacturing and the transport of materials and goods. The Company is continually assessing the climate related risks and the risks identified are integrated into our existing risk management processes to proactively manage the risks.
Development and performance
The director believes that the performance of the Company will continue to improve as a result of ongoing research and development, improved manufacturing and operational efficiency, investment in processes and people and focus on sku and customer profitability. A company-wide training programme has been created for all levels, enhancing both hard and soft skills and developing supervisory, junior and middle management.

The director believes that recent economic challenges due to Covid-19 will present a number of potential acquisition and expansion opportunities. The Company also expects to streamline the current range of products to create opportunities for growth and new product development, as innovation has been key to winning new significant, sustainable contracts.
Going concern
The bakery market remains a challenging environment for a variety of reasons. Whilst there is the continued risk of "normal" business volatility, there are also the added issues associated with the pandemic of Covid-19, unrest in Eastern Europe and the ensuing changes in both suppliers’ and consumers' behaviours. The costs of raw ingredients, energy and labour have seen unprecedented volatility which continues to present challenges and has resulted in price increases having to be presented to, and agreed with, customers. There appears to be no indication of this volatility abating and so the company is constantly monitoring all suppliers and regulating prices to customers accordingly, as needed.

The director believes that while this more dynamic environment is likely to continue, he is confident that the Company has adequate resources to continue in operational existence for the foreseeable future. Thus, he continues to adopt the going concern basis of accounting in preparing the annual financial statements.
This report was approved by the board of directors on 26 January 2024 and signed on behalf of the board by:
Mr P M Allen
Director
Registered office:
Genesis Bakery
31 Aughrim Road
Magherafelt
Northern Ireland
BT45 6BB
Hatch Brothers Limited
Independent Auditor's Report to the Members of Hatch Brothers Limited
Year ended 31 August 2023
Opinion
We have audited the financial statements of Hatch Brothers Limited for the year ended 31 August 2023 which comprise the Income Statement, the Statement of Comprehensive Income, the Statement of Financial Position, the Statement of Changes in Equity, the Statement of Cash Flows and notes to the financial statements, including a summary of significant accounting policies. The financial reporting framework that has been applied in their preparation is applicable law and United Kingdom Accounting Standards, including FRS 102 'The Financial Reporting Standard applicable in the UK and the Republic of Ireland' (United Kingdom Generally Accepted Accounting Practice).
In our opinion the financial statements:
give a true and fair view of the state of the company's affairs as at 31 August 2023 and of its profit for the year then ended;
have been properly prepared in accordance with United Kingdom Generally Accepted Accounting Practice;
have been prepared in accordance with the requirements of the Companies Act 2006.
Basis of 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 director with respect to going concern are described in the relevant sections of this report.
Other information
The other information comprises the information included in the annual report other than the financial statements and our auditor’s report thereon. The director is responsible for the other information contained within the annual report. Our opinion on the financial statements does not cover the other information and, except to the extent otherwise explicitly stated in our report, we do not express any form of assurance conclusion thereon. Our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the course of the audit, or otherwise appears to be materially misstated. If we identify such material inconsistencies or apparent material misstatements, we are required to determine whether this gives rise to a material misstatement in the financial statements themselves. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact.
We have nothing to report in this regard.
Opinions on other matters prescribed by the Companies Act 2006
In our opinion, based on the work undertaken in the course of the audit:
the information given in the strategic report and the director's report for the financial year for which the financial statements are prepared is consistent with the financial statements; and
the strategic report and the director's report have been prepared in accordance with applicable legal requirements.
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 director's report.
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 director's responsibilities statement, the director is responsible for the preparation of the financial statements and for being satisfied that they give a true and fair view, and for such internal control as the director determines is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.
In preparing the financial statements, the director is responsible for assessing the company’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the director either intends to liquidate the company or to cease operations, or 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:
Our approach to identifying and assessing the risks of material misstatement in respect of irregularities, including fraud and non-compliance with laws and regulations, was as follows:
- the engagement partner ensured that the engagement team collectively had the appropriate competence, capabilities and skills to identify or recognise non-compliance with applicable laws and regulations;

- we identified the laws and regulations applicable to the company through discussions with the director and other management, and from our commercial knowledge and experience of the food manufacturing sector;

- we focused on specific laws and regulations which we considered may have a direct material effect on the financial statements or the operations of the company, including the Companies Act 2006, taxation legislation, data protection, anti-bribery, employment, environmental and health and safety legislation;

- we assessed the extent of compliance with the laws and regulations identified above through making enquiries of management and inspecting legal correspondence; and

- identified laws and regulations were communicated within the audit team regularly and the team remained alert to instances of non-compliance throughout the audit.
We assessed the susceptibility of the company’s financial statements to material misstatement, including obtaining an understanding of how fraud might occur, by:
- making enquiries of management as to where they considered there was susceptibility to fraud, their knowledge of actual, suspected and alleged fraud; and

- considering the internal controls in place to mitigate risks of fraud and non-compliance with laws and regulations.
To address the risk of fraud through management bias and override of controls, we:
- performed analytical procedures to identify any unusual or unexpected relationships;

- tested journal entries to identify unusual transactions;

- assessed whether judgements and assumptions made in determining the accounting estimates set out in note 2 were indicative of potential bias; and

- investigated the rationale behind significant or unusual transactions.
In response to the risk of irregularities and non-compliance with laws and regulations, we designed procedures which included, but were not limited to:
- agreeing financial statement disclosures to underlying supporting documentation;

- reading the minutes of meetings of those charged with governance;

- enquiring of management as to actual and potential litigation and claims; and

- reviewing correspondence with HMRC and the company’s legal advisors.
There are inherent limitations in our audit procedures described above. The more removed that laws and regulations are from financial transactions, the less likely it is that we would become aware of non-compliance. Auditing standards also limit the audit procedures required to identify non-compliance with laws and regulations to enquiry of the director and other management and the inspection of regulatory and legal correspondence, if any.
Material misstatements that arise due to fraud can be harder to detect than those that arise from error as they may involve deliberate concealment or collusion.
A further description of our responsibilities for the audit of the financial statements is located 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.
Mr William Wilson 26 January 2024
Senior Statutory Auditor
For and on behalf of
William Wilson Chartered Accountants
Chartered Accountants and Statutory Auditor
25 Shore Road
Holywood
BT18 9HX
Hatch Brothers Limited
Income Statement
Year ended 31 August 2023
Notes 2023 2022
£ £
Turnover 3 22,867,917 21,576,700
Cost of sales (17,482,702) (16,755,783)
Gross profit 5,385,215 4,820,917
Administrative expenses (4,522,514) (4,435,559)
Other operating income 103,274 23,822
Operating profit 4 965,975 409,180
Profit on sale of fixed assets 154,311 24,225
Interest payable 7 (255,615) (194,665)
Profit on ordinary activities before taxation 864,671 238,740
Tax on profit on ordinary activities 8 (46,629) 130,818
Profit for the financial year 818,042 369,558
Hatch Brothers Limited
Statement of Comprehensive Income
Year ended 31 August 2023
Notes 2023 2022
£ £
Profit for the financial year 818,042 369,558
Other comprehensive income - -
Total comprehensive income for the year 818,042 369,558
Hatch Brothers Limited
Statement of Financial Position
31 August 2023
2023 2022
£ £
Notes
Fixed assets
Intangible assets 9 - (427,626)
Tangible assets 10 3,505,971 3,036,182
3,505,971 2,608,556
Current assets
Stocks 11 1,441,257 1,532,524
Debtors 12 2,111,479 2,639,818
Cash at bank and in hand 312,434 712,963
3,865,170 4,885,305
Creditors: amounts falling due within one year 13 (3,983,087) (5,010,572)
Net current liabilities (117,917) (125,267)
Total assets less current liabilities 3,388,054 2,483,289
Creditors: amounts falling due after more than one year 14 (767,546) (788,069)
Provisions for liabilities
Deferred taxation 17 (501,313) (394,067)
Net assets 2,119,195 1,301,153
Capital and reserves
Called up share capital 18 2 2
Profit and loss account 19 2,119,193 1,301,151
Members' funds 2,119,195 1,301,153
These financial statements were approved by the board of directors and authorised for issue on 26 January 2024, and are signed on behalf of the board by:
Mr P M Allen
Director
Company registration number: NI640138
Hatch Brothers Limited
Statement of Changes in Equity
Year ended 31 August 2023
Share Profit Total
capital and loss
account
£ £ £
At 1 September 2021 2 931,593 931,595
Profit for the financial year - 369,558 369,558
At 31 August 2022 2 1,301,151 1,301,153
At 1 September 2022 2 1,301,151 1,301,153
Profit for the financial year - 818,042 818,042
At 31 August 2023 2 2,119,193 2,119,195
Hatch Brothers Limited
Statement of Cash Flows
Year ended 31 August 2023
Notes 2023 2022
£ £
Operating activities
Profit for the financial year 818,042 369,558
Adjustments for:
Profit on sale of fixed assets (154,311) (24,225)
Interest payable 255,615 194,665
Tax on profit on ordinary activities 46,629 (130,818)
Depreciation 663,507 686,850
Amortisation of goodwill (427,626) (403,498)
Decrease/(increase) in stocks 91,267 (535,167)
Decrease/(increase) in debtors 528,339 (94,664)
(Decrease)/increase in creditors (1,006,304) 386,767
815,158 449,468
Interest paid (180,577) (162,091)
Interest element of finance lease payments (75,038) (32,574)
Corporation tax paid 60,617 149,347
Cash generated by operating activities 620,160 404,150
Investing activities
Payments to acquire tangible fixed assets (302,050) (404,507)
Proceeds from sale of tangible fixed assets 94,169 175,379
Cash used in investing activities (207,881) (229,128)
Financing activities
Repayment of loans (9,821) (9,578)
Capital element of finance lease payments (548,094) (389,965)
Cash used in financing activities (557,915) (399,543)
Net cash used
Cash generated by operating activities 620,160 404,150
Cash used in investing activities (207,881) (229,128)
Cash used in financing activities (557,915) (399,543)
Net cash used (145,636) (224,521)
Cash and cash equivalents at 1 September (945,084) (720,563)
Cash and cash equivalents at 31 August (1,090,720) (945,084)
Cash and cash equivalents comprise:
Cash at bank 312,434 712,963
Bank overdrafts 13 (1,403,154) (1,658,047)
(1,090,720) (945,084)
Hatch Brothers Limited
Notes to the Accounts
Year ended 31 August 2023
1 General information
The company is a private company limited by shares, registered in Northern Ireland. The address of the registered office is Gensis Bakery, 31 Aughrim Road, Magherafelt, Northern Ireland, BT45 6BB.
Statement of compliance
These financial statements have been prepared in compliance with FRS 102, "The Financial Reporting Standard applicable in the UK and Republic of Ireland" and the Companies Act 2006.
2 Summary of significant accounting policies
Basis of preparation
The financial statements have been prepared under the historical cost basis , as modified by the revaluation of certain financial assets and liabilities and investment properties measured at fair value through the profit and loss.
The finanical statements are prepared in sterling, which is the functional currency of the entity.
In accordance with the company's accounting policy of preparing accounts to a Sunday within 7 days of the accounting reference date (31 August), these financial statements cover the period from 5 September 2022 to 3 September 2023. The prior year's financial statements covered the period from 6 September 2021 to 4 September 2022.
Going concern
The food manufacturing sector remains a challenging environment due to the rising costs of raw materials and energy. However, the director is confident that the Company has adequate resources to continue in operational existence for at least 12 months from the date of this report. Thus, he continues to adopt the going concern basis of accounting in preparing the annual financial statements.
Judgements and key sources of estimation uncertainty
The preparation of the financial statements requires management to make judgements, estimates and assumptions that reflect the amounts reported. These estimates and judgements are continually reviewed and are based on experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances.
In preparing these financial statements, the directors have made the following judgements:
- Determine whether leases entered into the by company either as a lessor or lessee are operating or finance leases. These decisions depend on an assessment of whether the risks and rewards of ownership have been transferred from the lessor to the lessee on a lease by lease basis.
- Determine whether there are indicators of impairment of the company's tangible assets. Factors taken into consideration in reaching such a decision include the economic viability and expected future financial performance of the asset.
Revenue recognition
Turnover is measured at the fair value of the consideration received or receivable for goods supplied or services rendered, net of discounts and Value Added Tax.
Revenue from the sale of goods is recognised when the significant risks and rewards of ownership have transferred to the buyer (usually on despatch of the goods); the amount of revenue can be measured reliably; it is probable that the associated economic benefits will flow to the entity; and the costs incurred or to be incurred in respect of the transactions can be measured reliably.
Intangible fixed assets
Intangible fixed assets are measured at cost less accumulative amortisation and any accumulative impairment losses.
Goodwill 5 years straight line
Brand Between 1 year and 5 years straight line
There is no amortisation charged in the year of acquistion.
If the net fair value of the identifiable assets and liabilities acquired exceeds the cost of a business combination, the excess up to the fair value of non-monetary assets acquired is recognised in the profit or loss in the periods in which the non-monetary assets are recovered. Any excess exceeding the fair value of non-monetary assets acquired is recognised in profit or loss in the periods expected to be benefitted.
Negative goodwill
Negative goodwill is deferred and recognised on the face of the statement of financial position immediately below any positive goodwill.
Tangible assets
Tangible assets are initially recorded at cost, and subsequently stated at cost less any accumulated depreciation and impairment losses. Any tangible assets carried at revalued amounts are recorded at the fair value at the date of revaluation less any subsequent accumulated depreciation and subsequent accumulated impairment losses.
An increase in the carrying amount of an asset as a result of a revaluation, is recognised in other comprehensive income and accumulated in equity, except to the extent it reverses a revaluation decrease of the same asset previously recognised in profit or loss. A decrease in the carrying amount of an asset as a result of revaluation, is recognised in other comprehensive income to the extent of any previously recognised revaluation increase accumulated in equity in respect of that asset. Where a revaluation decrease exceeds the accumulated revaluation gains accumulated in equity in respect of that asset, the excess shall be recognised in profit or loss.
Depreciation
Depreciation is calculated so as to write off the cost or valuation of an asset, less its residual value, over the useful economic life of that asset as follows:
Motor vehicles 4 years straight line
Computer equipment 3, 4 and 5 years straight line
Plant and machinery 10 years straight line & 12 years straight line
Fixtures and fittings 5 years straight line
No depreciation is charged in the year of acquisition.
Impairment of fixed assets
A review for indicators of impairment is carried out at each reporting date, with the recoverable amount being estimated where such indicators exist. Where the carrying value exceeds the recoverable amount, the asset is impaired accordingly. Prior impairments are also reviewed for possible reversal at each reporting date.
For the purposes of impairment testing, when it is not possible to estimate the recoverable amount of an individual asset, an estimate is made of the recoverable amount of the cash-generating unit to which the asset belongs. The cash-generating unit is the smallest identifiable group of assets that includes the asset and generates cash inflows that largely independent of the cash inflows from other assets or groups of assets.
Trade and other debtors
Trade and other debtors that are receivable within one year and do not constitute a financing transaction are recorded at the undiscounted amount expected to be received, net of impairment. Those that are receivable after more than one year or that constitute a financing transaction are recorded initially at fair value less transaction costs and subsequently at amortised cost, net of impairment.
Cash and cash equivalents
Cash and cash equivalents comprise cash at bank and in hand, demand deposits with banks and other short-term high liquidity investments with original maturities of three months or less and bank overdrafts. In the statement of financial position, bank overdrafts are shown within borrowings or current liabilities.
Trade and other creditors
Trade and other creditors are initially recognised at fair value and thereafter stated at amortised cost using the effective interest method unless the effect of the discounting would be immaterial, in which case they are stated at cost.
Interest bearing borrowings
Interest bearing borrowings are recognised initially at fair value less attributable transaction costs. Subsequent to initial recognition, interest bearing borrowings are stated at amortised cost with any difference between the amount initially recognised and the redemption value being recognised in the statement of comprehensive income over the period of the borrowings, together with any interest and fees payable, using the effective interest method.
Stocks
Stocks are measured at the lower of cost and estimated selling price less costs to complete and sell. Costs, which comprise direct production costs and an appropriate allocation of production overheads, are based on the method most appropriate to the type of inventory class, but usually on a first-in-first-out basis. Net realisable value is based on the estimated selling price less any estimated completion or selling costs.
Income tax
The taxation expense represents the aggregate amount of current and deferred tax recognised in the reporting period. Tax is recognised in profit or loss, except to the extent that it relates to items recognised in other comprehensive income or directly in equity. In this case, tax is recognised in other comprehensive income or directly in equity, respectively.
Current tax is recognised on taxable profit for the current and past periods. Current tax is measured at the amounts of tax expected to pay or recover using the tax rates and laws that have been enacted or substantively enacted at the reporting date.
Deferred tax is recognised in respect of all timing differences at the reporting date. Unrelieved tax losses and other 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. Deferred tax is measured using the tax rates and laws that have been enacted or substantively enacted by the reporting date that are expected to apply to the reversal of the timing difference.
Provisions
Provisions are recognised when the entity has an obligation at the reporting date as a result of a past event, it is probable that the entity will be required to transfer economic benefits in settlement and the amount of the obligation can be estimated reliably. Provisions are recognised as a liability in the statement of financial position and the amount of the provision as an expense.
Provisions are initially measured at the best estimate of the amount requires to settle the obligation at the reporting date and adjusted to reflect the current best estimate of the amount that would be required to settle the obligation. Any adjustments to the amounts previously recognised are recognised in the profit or loss unless the provision was originally recognised as part of the cost of an asset. When a provision is measured at the present value of the amount expected to be required to settle the obligation, the unwinding of the discount is recognised as a finance cost in the profit or loss in the period it arises.
Financial instruments
A financial asset or a financial liability is recognised only when the company becomes a party to the contractual provisions of the instrument.
Basic financial instruments are initially recognised at the transaction price, unless the arrangement constitutes a financing transaction, where it is recognised at the present value of the future payments discounted at a market rate of interest for a similar debt instrument.
Foreign currency translation
Transactions in foreign currencies are initially recognised at the rate of exchange ruling at the date of the transaction.

At the end of each reporting period foreign currency monetary items are translated at the closing rate of exchange. Non-monetary items that are measured at historical cost are translated at the rate ruling at the date of the transaction. All differences are charged to profit or loss.
Leased assets
A lease is classified as a finance lease if it transfers substantially all the risks and rewards incidental to ownership. All other leases are classified as operating leases. The rights of use and obligations under finance leases are initially recognised as assets and liabilities at amounts equal to the fair value of the leased assets or, if lower, the present value of the minimum lease payments. Minimum lease payments are apportioned between the finance charge and the reduction in the outstanding liability using the effective interest rate method. The finance charge is allocated to each period during the lease so as to produce a constant periodic rate of interest on the remaining balance of the liability. Leased assets are depreciated in accordance with the company's policy for tangible fixed assets. If there is no reasonable certainty that ownership will be obtained at the end of the lease term, the asset is depreciated over the lower of the lease term and its useful life. Operating lease payments are recognised as an expense on a straight line basis over the lease term.
Pensions
Contributions to defined contribution plans are recognised as an expense in the period in which the related service is provided. Prepaid contributions are recognised as an asset to the extent that the prepayment will lead to a reduction in future payments or a cash refund.
3 Analysis of turnover 2023 2022
£ £
Sale of goods 22,786,458 21,492,373
Commissions 81,459 84,327
22,867,917 21,576,700
By geographical market:
UK 22,621,709 21,309,733
Europe 246,208 266,967
22,867,917 21,576,700
4 Operating profit 2023 2022
£ £
This is stated after charging:
Depreciation of owned fixed assets 537,109 341,547
Depreciation of assets held under finance leases and hire purchase contracts 126,398 345,303
Goodwill amortisation/recovery (446,381) (412,917)
Brand amortisation 42,883 40,714
Auditors' remuneration for audit services 10,000 10,000
Auditors' remuneration for other services 4,600 3,600
Job Retention Scheme - (3,396)
5 Director's emoluments 2023 2022
£ £
Emoluments 300,000 250,000
Highest paid director:
Emoluments 300,000 250,000
Company contributions to defined contribution pension plans 10,000 8,333
310,000 258,333
Number of directors to whom retirement benefits accrued: 2023 2022
Number Number
Defined contribution plans 1 1
6 Staff costs 2023 2022
£ £
Wages and salaries 6,977,612 6,645,597
Temporary staff costs 104,569 112,494
Social security costs 583,574 565,550
Other pension costs 157,626 126,850
7,823,381 7,450,491
Average number of employees during the year 2023 2022
Number Number
Administration 12 12
Development 3 8
Distribution 29 23
Manufacturing/manufacturing support 178 216
Technical 11 11
Sales 26 28
259 298
Full time equivalent average number of employees 171 244
7 Interest payable 2023 2022
£ £
Bank loans and overdrafts 147,032 97,112
Other loans 33,545 64,979
Finance charges payable under finance leases and hire purchase contracts 75,038 32,574
255,615 194,665
8 Taxation 2023 2022
£ £
Analysis of charge in period
Current tax:
UK corporation tax on profits of the period (50,000) (149,347)
Adjustments in respect of previous periods (10,617) -
(60,617) (149,347)
Deferred tax:
Origination and reversal of timing differences 107,246 18,529
Tax on profit/(loss) on ordinary activities 46,629 (130,818)
Factors affecting tax charge for period
The differences between the tax assessed for the period and the standard rate of corporation tax are explained as follows:
2023 2022
£ £
Profit on ordinary activities before tax 864,671 238,740
Standard rate of corporation tax in the UK 19% 19%
£ £
Profit on ordinary activities multiplied by the standard rate of corporation tax 164,287 45,361
Effects of:
Expenses not deductible for tax purposes 4,980 2,329
Capital allowances for period in excess of depreciation (105,984) 8,805
Utilisation of tax losses 1,837 46,349
Adjustments to tax charge in respect of previous periods (10,617) -
Profit on sale of fixed assets (31,473) (4,603)
Amortisation charge (83,647) (76,665)
Enhanced R&D expenditure - (170,923)
Current tax charge for period (60,617) (149,347)
9 Intangible fixed assets
Brand Goodwill Total
£ £ £
Cost
At 1 September 2022 242,219 (3,004,217) (2,761,998)
At 31 August 2023 242,219 (3,004,217) (2,761,998)
Amortisation
At 1 September 2022 223,463 (2,557,835) (2,334,372)
Provided during the year 18,756 (446,382) (427,626)
At 31 August 2023 242,219 (3,004,217) (2,761,998)
Carrying amount
At 31 August 2023 - - -
At 31 August 2022 18,756 (446,382) (427,626)
Goodwill has been written off in equal annual instalments over its estimated economic life of 5 years.
10 Tangible fixed assets
Leasehold improvements Plant and machinery etc Motor vehicles Total
At cost At cost At cost
£ £ £ £
Cost or valuation
At 1 September 2022 502,668 4,575,955 859,416 5,938,039
Additions 14,382 191,257 1,266,996 1,472,635
Disposals - (556) (587,750) (588,306)
At 31 August 2023 517,050 4,766,656 1,538,662 6,822,368
Depreciation
At 1 September 2022 96,982 2,311,548 493,327 2,901,857
Charge for the year 22,878 508,904 131,725 663,507
On disposals - (556) (248,411) (248,967)
At 31 August 2023 119,860 2,819,896 376,641 3,316,397
Carrying amount
At 31 August 2023 397,190 1,946,760 1,162,021 3,505,971
At 31 August 2022 405,686 2,264,407 366,089 3,036,182
2023 2022
£ £
Carrying value of plant, machinery and motor vehicles included above held under finance leases and hire purchase contracts 1,232,430 1,502,487
11 Stocks 2023 2022
£ £
Raw materials and consumables 1,112,558 1,211,271
Work in progress 169,288 74,159
Finished goods and goods for resale 159,411 247,094
1,441,257 1,532,524
12 Debtors 2023 2022
£ £
Trade debtors 1,432,531 1,954,614
Corporation tax 50,000 149,347
VAT 106,792 164,689
Other debtors 355,725 191,617
Prepayments and accrued income 166,431 179,551
2,111,479 2,639,818
13 Creditors: amounts falling due within one year 2023 2022
£ £
Bank overdrafts 1,403,154 1,658,047
Bank loans 9,965 9,722
Obligations under finance lease and hire purchase contracts 239,924 354,636
Trade creditors 1,721,524 2,245,114
PAYE 158,315 255,969
Other creditors 290,474 218,006
Accruals and deferred income 159,731 269,078
3,983,087 5,010,572
Mr P M Allen (a director of the company) holds a mortgage charge over the present leasehold property and a fixed charge over the future freehold/leasehold property; rents; rights attaching to the real property; fixtures and fittings; plant and machinery etc; furniture etc; licences etc; goodwill/uncalled capital; choses in action/claims/intellectual property; debts; credit balances; negotiable instruments; and insurances of the company. He also holds a floating charge over all the property or undertaking of the company.
Upstream Working Capital Limited hold a fixed charge and a floating charge over the company. The fixed charge is over the company's non-vesting debts; other debts and any claim made by or on behalf of the company under the Criminal Damages (Compensation) (Northern Ireland) Order 1977. The floating charge covers all the property or undertaking of the company.
Allen Family SSAS hold a fixed and a floating charge over all the property or undertaking of the company.
The following charge was registered as being satisfied at Companies House on 1 December 2022:
Upstream Trade Finance Limited held a fixed and floating charge over the assets of the company. This was a security assignment and floating charge in respect of the supply and production of a seasonal product for a customer between October and December 2019.
14 Creditors: amounts falling due after one year 2023 2022
£ £
Bank loans 18,339 28,403
Obligations under finance lease and hire purchase contracts 653,587 315,865
Other creditors 95,620 443,801
767,546 788,069
15 Loans 2023 2022
£ £
Analysis of maturity of debt:
Within one year or on demand 1,413,119 1,667,769
Between one and two years 9,965 9,722
Between two and five years 8,374 18,682
1,431,458 1,696,173
16 Obligations under finance leases and hire purchase 2023 2022
contracts £ £
Amounts payable:
Within one year 239,924 354,636
Within two to five years 653,587 315,865
893,511 670,501
17 Deferred taxation 2023 2022
£ £
Accelerated capital allowances 501,313 394,067
2023 2022
£ £
At 1 September 394,067 375,538
Charged to the profit and loss account 107,246 18,529
At 31 August 501,313 394,067
18 Share capital Nominal 2023 2023 2022
value Number £ £
Allotted, called up and fully paid:
Ordinary shares £1 each 2 2
19 Profit and loss account 2023 2022
£ £
At 1 September 1,301,151 931,593
Profit for the financial year 818,042 369,558
At 31 August 2,119,193 1,301,151
20 Reconciliation of net debt
1 September 2022 Cash flows Non-cash changes 31 August 2023
£ £ £ £
Cash and cash equivalents 712,963 (400,529) - 312,434
Bank overdrafts (1,658,047) 254,893 - (1,403,154)
(945,084) (145,636) - (1,090,720)
Borrowings:
Bank loans (38,125) 9,821 - (28,304)
Finance lease/HP (670,501) (223,011) (893,512)
Other loans (443,801) 348,181 - (95,620)
(1,152,427) 134,991 - (1,017,436)
Net debt (2,097,511) (10,645) - (2,108,156)
21 Other financial commitments
Total future minimum lease payments under non-cancellable operating leases:
Land and buildings Land and buildings Other Other
2023 2022 2023 2022
£ £ £ £
Falling due:
within one year 62,407 62,407 28,608 41,800
within two to five years - - - -
62,407 62,407 28,608 41,800
22 Loans to/(from) directors
Description and conditions B/fwd Paid Repaid C/fwd
£ £ £ £
Mr P M Allen
8% interest (443,801) (271,816) 619,997 (95,620)
(443,801) (271,816) 619,997 (95,620)
23 Guarantees
The Department of Business Energy Industrial Strategy has given guarantees in respect of the CBILS loan. The balance of this loan at the balance sheet date was £28,304 (2022:£38,125).
24 Related party transactions
Pastaking (UK) Limited
Mr P M Allen is deemed to be the ultimate controlling party of Pastaking (UK) Limited. During the year the company made payments on behalf of Pastaking (UK) Limited. At the balance sheet date an amount of £221,101 (2022: £129,220) due from Pastaking (UK) Limited was included in other debtors.
25 Controlling party
Mr P M Allen and Mrs N A Allen each hold 50% of the share capital of the company. Mr P M Allen is also the sole director of the company. Mr P M Allen is deemed to be the controlling party of the company.
26 Presentation currency
The financial statements are presented in Sterling.
27 Legal form of entity and country of incorporation
Hatch Brothers Limited is a private company limited by shares and incorporated in Northern Ireland.
28 Principal place of business
The address of the company's principal place of business and registered office is:
Genesis Bakery
31 Aughrim Road
Magherafelt
Northern Ireland
BT45 6BB
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