Company registration number 11690895 (England and Wales)
STERLING MEAT COMPANY LIMITED
ANNUAL REPORT AND FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
STERLING MEAT COMPANY LIMITED
COMPANY INFORMATION
Directors
Mr T Cribbin
Ms E M Cribbin
Company number
11690895
Registered office
Chaddock Lane
Astley
Tyldesley
Manchester
M29 7JY
Auditor
Sumer Auditco Limited
The Beehive
City Place
Gatwick
RH6 0PA
STERLING MEAT COMPANY LIMITED
CONTENTS
Page
Strategic report
1 - 2
Directors' report
3 - 4
Independent auditor's report
5 - 7
Statement of comprehensive income
8
Balance sheet
9
Statement of changes in equity
10
Statement of cash flows
11
Notes to the financial statements
12 - 24
STERLING MEAT COMPANY LIMITED
STRATEGIC REPORT
FOR THE YEAR ENDED 31 DECEMBER 2023
- 1 -
The directors present the strategic report for the year ended 31 December 2023.
Review of the business
The business has had a successful year with total turnover of £22,846,342 this is an increase of £8,040,823 in comparison to total sales in the previous period. Gross profit margin for the year was 36.9%.
Administrative expenses for the year total £7,078,687.
The directors are pleased to report profit before tax of £1,337,412 in comparison to a profit of £674,884 in the prior year. EBITDA for the year was £1,534,759 (2022: £811,884).
The profitable year has helped the Company further strengthen the balance sheet position at the year end with closing net assets of £908,757.
Principal risks and uncertainties
Principal risks and uncertainties affecting the business include:
Liquidity risk
The company manages liquidity risk by maintaining adequate reserves and by monitoring forecasts and actual cash flows.
The directors are satisfied that the risk has been adequately managed throughout the period.
Market Trading Dynamics
The UK was officially declared in recession with food inflation remaining high. Numerous high-profile businesses fell foul to the market dynamics which is testament to how tough the retail market is.
The Company is committed to delivering the absolute best Quality, Service and Value which resonated during 2023, attracting 1.64m customers growing at 44% year on year. Shoppers were delighted to experience up to 40% better value compared to major retailers. The Company revamped all Meat Mart outlets which had a positive impact on sales and profit growth. Their unique point of difference has won the hearts and minds of shoppers who are proactively promoting the business on social media which is attracting their future growth. The brand reputation for doing the right thing has strengthened year on year.
Market Trading Outlook
Economic momentum is set to return to all parts of the UK between 2024 and 2027, but London and the Southeast are forecast to see faster growth than the UK average. All other locations are forecast to see employment grow at a slower rate than the UK average.
UK inflation will remain high. However, the Company is committed to driving their proven EDLP strategy "every day low price" which is attracting more customers towards SMCo. Switching from major multiples and discount stores.
Eleven of the twelve shops have been revamped with the Hull shop being the latest on the list. The shop will be totally reconfigured offering the absolute best high street aesthetics. Superb kerb appeal and aroma marketing will drive positive sales growth which in turn will contribute to the predicted Company growth during 2024.
Key performance indicators
Key performance indicators continue to be used throughout the business. The Company's focus is on continuous improvement to sell more and save more. Their actions are driving positive revenues and pretax profit. The Company regularly measures and benchmarks its own success compared to the market and reviews the internal annualised performance.
Development and performance
Overall, the directors are pleased with the current year performance, and they have capitalised on the great momentum into 2023. The Company aims to grow its fresh food market share which in turn will increase turnover and pretax profit. Note: 2024 year to date numbers are significantly ahead of the market.
STERLING MEAT COMPANY LIMITED
STRATEGIC REPORT (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
- 2 -
Future developments
The Company aims to grow its market share in the food retail business and to improve turnover and profit before tax. The Company will continue to focus on their mission statement to deliver the absolute best Quality, Service and Value which will be at the forefront of their 2024 trading strategy.
Mr T Cribbin
Director
23 April 2024
STERLING MEAT COMPANY LIMITED
DIRECTORS' REPORT
FOR THE YEAR ENDED 31 DECEMBER 2023
- 3 -
The directors present their annual report and financial statements for the year ended 31 December 2023.
Principal activities
The principal activity of the company was that of retail sale of meat and meat products in specialised stores.
Results and dividends
The results for the year are set out on page 8.
Ordinary dividends were paid amounting to £1,080,000. The directors do not recommend payment of a further dividend.
Directors
The directors who held office during the year and up to the date of signature of the financial statements were as follows:
Mr T Cribbin
Ms E M Cribbin
Future developments
The strategic report contains details of future developments.
Auditor
Sumer Auditco Limited were appointed as auditor to the company and are deemed to be reappointed under section 487(2) of the Companies Act 2006.
Statement of directors' responsibilities
The directors are responsible for preparing the annual report and the financial statements in accordance with applicable law and regulations.
Company law requires the directors to prepare financial statements for each financial year. Under that law the directors have elected to prepare the financial statements in accordance with United Kingdom Generally Accepted Accounting Practice (United Kingdom Accounting Standards and applicable law). Under company law the directors must not approve the financial statements unless they are satisfied that they give a true and fair view of the state of affairs of the company and of the profit or loss of the company for that period. In preparing these financial statements, the directors are required to:
select suitable accounting policies and then apply them consistently;
make judgements and accounting estimates that are reasonable and prudent;
state whether applicable UK Accounting Standards have been followed, subject to any material departures disclosed and explained in the financial statements;
prepare the financial statements on the going concern basis unless it is inappropriate to presume that the company will continue in business.
The directors are responsible for keeping adequate accounting records that are sufficient to show and explain the company’s transactions and disclose with reasonable accuracy at any time the financial position of the company and enable them to ensure that the financial statements comply with the Companies Act 2006. They are also responsible for safeguarding the assets of the company and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.
Statement of disclosure to auditor
So far as each person who was a director at the date of approving this report is aware, there is no relevant audit information of which the company’s auditor is unaware. Additionally, the directors individually have taken all the necessary steps that they ought to have taken as directors in order to make themselves aware of all relevant audit information and to establish that the company’s auditor is aware of that information.
STERLING MEAT COMPANY LIMITED
DIRECTORS' REPORT (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
- 4 -
On behalf of the board
Mr T Cribbin
Director
23 April 2024
STERLING MEAT COMPANY LIMITED
INDEPENDENT AUDITOR'S REPORT
TO THE MEMBERS OF STERLING MEAT COMPANY LIMITED
- 5 -
Opinion
We have audited the financial statements of Sterling Meat Company Limited (the 'company') for the year ended 31 December 2023 which comprise the statement of comprehensive income, the balance sheet, the statement of changes in equity, the statement of cash flows and notes to the financial statements, including significant accounting policies. The financial reporting framework that has been applied in their preparation is applicable law and United Kingdom Accounting Standards, including Financial Reporting Standard 102 The Financial Reporting Standard applicable in the UK and Republic of Ireland (United Kingdom Generally Accepted Accounting Practice).
In our opinion the financial statements:
give a true and fair view of the state of the company's affairs as at 31 December 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.
We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and applicable law. Our responsibilities under those standards are further described in the Auditor's responsibilities for the audit of the financial statements section of our report. We are independent of the company in accordance with the ethical requirements that are relevant to our audit of the financial statements in the UK, including the FRC’s Ethical Standard, and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
Conclusions relating to going concern
In auditing the financial statements, we have concluded that the directors' use of the going concern basis of accounting in the preparation of the financial statements is appropriate.
Based on the work we have performed, we have not identified any material uncertainties relating to events or conditions that, individually or collectively, may cast significant doubt on the company's ability to continue as a going concern for a period of at least twelve months from when the financial statements are authorised for issue.
Our responsibilities and the responsibilities of the directors with respect to going concern are described in the relevant sections of this report.
The other information comprises the information included in the annual report other than the financial statements and our auditor's report thereon. The directors are responsible for the other information contained within the annual report. Our opinion on the financial statements does not cover the other information and, except to the extent otherwise explicitly stated in our report, we do not express any form of assurance conclusion thereon. Our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the course of the audit, or otherwise appears to be materially misstated. If we identify such material inconsistencies or apparent material misstatements, we are required to determine whether this gives rise to a material misstatement in the financial statements themselves. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact.
We have nothing to report in this regard.
Opinions on other matters prescribed by the Companies Act 2006
In our opinion, based on the work undertaken in the course of our audit:
the information given in the strategic report and the directors' report for the financial 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.
STERLING MEAT COMPANY LIMITED
INDEPENDENT AUDITOR'S REPORT (CONTINUED)
TO THE MEMBERS OF STERLING MEAT COMPANY LIMITED
- 6 -
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.
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 remuneration specified by law are not made; or
we have not received all the information and explanations we require for our audit.
Responsibilities of directors
As explained more fully in the directors' responsibilities statement, the directors are responsible for the preparation of the financial statements and for being satisfied that they give a true and fair view, and for such internal control as the directors determine is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error. In preparing the financial statements, the directors are responsible for assessing the company's ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the directors either intend to liquidate the company or to cease operations, or have no realistic alternative but to do so.
Auditor's responsibilities for the audit of the financial statements
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor's report that includes our opinion. Reasonable assurance is a high level of assurance but is not a guarantee that an audit conducted in accordance with ISAs (UK) will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements.
Irregularities, including fraud, are instances of non-compliance with laws and regulations. We design procedures in line with our responsibilities, outlined above, to detect material misstatements in respect of irregularities, including fraud. The extent to which our procedures are capable of detecting irregularities, including fraud, is detailed below.
We identified areas of laws and regulations that could reasonably be expected to have a material effect on the financial statements from our general commercial and sector experience, and through discussions with the directors (as required by auditing standards) and discussed with the directors the policies and procedures regarding compliance with laws and regulations. We communicated identified laws and regulations throughout our team and remained alert to any indications of non-compliance throughout the audit. The potential effect of these laws and regulations on the financial statements varies considerably.
Firstly, the company is subject to laws and regulations that directly affect the financial statements including financial reporting legislation and taxation legislation. We assessed the extent of compliance with these laws and regulations as part of our procedures on the related financial statement items.
Secondly, the company is subject to many other laws and regulations where the consequences of non-compliance could have a material effect on amounts or disclosures in the financial statements, for instance through the imposition of fines or litigation. We identified the following areas as those most likely to have such an effect: Companies Act 2006, FRS102, Health and Safety at Work Act, Food Standards Agency and Employment Law.
Auditing standards limit the required audit procedures to identify non-compliance with these laws and regulations to enquiry of the directors and inspection of regulatory and legal correspondence, if any. Through these procedures we did not become aware of any actual or suspected non-compliance.
STERLING MEAT COMPANY LIMITED
INDEPENDENT AUDITOR'S REPORT (CONTINUED)
TO THE MEMBERS OF STERLING MEAT COMPANY LIMITED
- 7 -
Owing to the inherent limitations of an audit, there is an unavoidable risk that we may not have detected some material misstatements in the financial statements, even though we have properly planned and performed our audit in accordance with auditing standards. For example, the further removed non-compliance with laws and regulations (irregularities) is from the events and transactions reflected in the financial statements, the less likely the inherently limited procedures required by auditing standards would identify it. In addition, as with any audit, there remained a higher risk of non-detection of irregularities, as these may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal controls. We are not responsible for preventing non-compliance and cannot be expected to detect non-compliance with all laws and regulations.
We design procedures in line with our responsibilities, outlined below to detect material misstatement due to fraud:
Matters are discussed amongst the audit engagement team regarding how and where fraud might occur in the financial statements and any potential indicators of fraud
Identifying and assessing the design and effectiveness of controls that management have in place to prevent and detect fraud
Detecting and responding to the risks of fraud following discussions with management and enquiring as to whether management have knowledge of any actual, suspected or alleged fraud;
A further description of our responsibilities is available on the Financial Reporting Council’s website at: https://www.frc.org.uk/auditorsresponsibilities. This description forms part of our auditor's report.
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.
Alex Hesketh
Senior Statutory Auditor
For and on behalf of Sumer Auditco Limited
23 April 2024
Statutory Auditor
The Beehive
City Place
Gatwick
RH6 0PA
STERLING MEAT COMPANY LIMITED
STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEAR ENDED 31 DECEMBER 2023
- 8 -
2023
2022
Notes
£
£
Turnover
3
22,846,342
14,805,519
Cost of sales
(14,416,410)
(9,143,175)
Gross profit
8,429,932
5,662,344
Administrative expenses
(7,078,688)
(4,957,567)
Operating profit
4
1,351,244
704,777
Interest receivable and similar income
7
1,642
Interest payable and similar expenses
8
(15,474)
(29,893)
Profit before taxation
1,337,412
674,884
Tax on profit
9
(331,013)
(156,069)
Profit for the financial year
1,006,399
518,815
EBITDA
1,534,759
811,884
The profit and loss account has been prepared on the basis that all operations are continuing operations.
STERLING MEAT COMPANY LIMITED
BALANCE SHEET
AS AT
31 DECEMBER 2023
31 December 2023
- 9 -
2023
2022
Notes
£
£
£
£
Fixed assets
Tangible assets
12
1,110,500
917,095
Investments
13
1
1,110,500
917,096
Current assets
Stocks
14
441,038
415,765
Debtors
15
414,287
382,946
Cash at bank and in hand
767,699
415,913
1,623,024
1,214,624
Creditors: amounts falling due within one year
16
(1,452,757)
(638,198)
Net current assets
170,267
576,426
Total assets less current liabilities
1,280,767
1,493,522
Creditors: amounts falling due after more than one year
17
(168,118)
(388,930)
Provisions for liabilities
Deferred tax liability
19
203,892
122,234
(203,892)
(122,234)
Net assets
908,757
982,358
Capital and reserves
Called up share capital
21
100
100
Profit and loss reserves
908,657
982,258
Total equity
908,757
982,358
The financial statements were approved by the board of directors and authorised for issue on 23 April 2024 and are signed on its behalf by:
Mr T Cribbin
Director
Company registration number 11690895 (England and Wales)
STERLING MEAT COMPANY LIMITED
STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 DECEMBER 2023
- 10 -
Share capital
Profit and loss reserves
Total
£
£
£
Balance at 1 January 2022
100
463,443
463,543
Year ended 31 December 2022:
Profit and total comprehensive income for the year
-
518,815
518,815
Balance at 31 December 2022
100
982,258
982,358
Year ended 31 December 2023:
Profit and total comprehensive income for the year
-
1,006,399
1,006,399
Dividends
10
-
(1,080,000)
(1,080,000)
Balance at 31 December 2023
100
908,657
908,757
STERLING MEAT COMPANY LIMITED
STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED 31 DECEMBER 2023
- 11 -
2023
2022
Notes
£
£
£
£
Cash flows from operating activities
Cash generated from operations
25
2,245,018
115,885
Interest paid
(15,474)
(29,893)
Income taxes paid
(69,119)
(65,569)
Net cash inflow from operating activities
2,160,425
20,423
Investing activities
Purchase of tangible fixed assets
(667,048)
(470,613)
Proceeds from disposal of tangible fixed assets
186,514
(10)
Proceeds from disposal of investment property
(1)
Proceeds from disposal of investments
1
Interest received
1,642
Net cash used in investing activities
(478,892)
(470,623)
Financing activities
Repayment of loan
(249,747)
474,866
Dividends paid
(1,080,000)
Net cash (used in)/generated from financing activities
(1,329,747)
474,866
Net increase in cash and cash equivalents
351,786
24,666
Cash and cash equivalents at beginning of year
415,913
391,247
Cash and cash equivalents at end of year
767,699
415,913
STERLING MEAT COMPANY LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
- 12 -
1
Accounting policies
Company information
Sterling Meat Company Limited is a private company limited by shares incorporated in England and Wales. The registered office is Chaddock Lane, Astley, Tyldesley, Manchester, M29 7JY.
1.1
Accounting convention
These financial statements have been prepared in accordance with FRS 102 “The Financial Reporting Standard applicable in the UK and Republic of Ireland” (“FRS 102”) and the requirements of the Companies Act 2006.
The financial statements are prepared in sterling, which is the functional currency of the company. Monetary amounts in these financial statements are rounded to the nearest £.
The financial statements have been prepared under the historical cost convention. The principal accounting policies adopted are set out below.
1.2
Going concern
Atruet the time of approving the financial statements, the directors have a reasonable expectation that the company has adequate resources to continue in operational existence for the foreseeable future. Thus the directors continue to adopt the going concern basis of accounting in preparing the financial statements.
1.3
Turnover
Turnover is recognised at the fair value of the consideration received or receivable for goods and services provided in the normal course of business, and is shown net of VAT and other sales related taxes. The fair value of consideration takes into account trade discounts, settlement discounts and volume rebates.
Revenue from the sale of goods is recognised when the significant risks and rewards of ownership of the goods have passed to the buyer (usually on dispatch of the goods), the amount of revenue can be measured reliably, it is probable that the economic benefits associated with the transaction will flow to the entity and the costs incurred or to be incurred in respect of the transaction can be measured reliably.
1.4
Intangible fixed assets - goodwill
Goodwill represents the excess of the cost of acquisition of unincorporated businesses over the fair value of net assets acquired. It is initially recognised as an asset at cost and is subsequently measured at cost less accumulated amortisation and accumulated impairment losses. Goodwill is considered to have a finite useful life and is amortised on a systematic basis over its expected life, which is one year.
For the purposes of impairment testing, goodwill is allocated to the cash-generating units expected to benefit from the acquisition. Cash-generating units to which goodwill has been allocated are tested for impairment at least annually, or more frequently when there is an indication that the unit may be impaired. If the recoverable amount of the cash-generating unit is less than the carrying amount of the unit, the impairment loss is allocated first to reduce the carrying amount of any goodwill allocated to the unit and then to the other assets of the unit pro-rata on the basis of the carrying amount of each asset in the unit.
1.5
Tangible fixed assets
Tangible fixed assets are initially measured at cost and subsequently measured at cost or valuation, net of depreciation and any impairment losses.
STERLING MEAT COMPANY LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
1
Accounting policies
(Continued)
- 13 -
Depreciation is recognised so as to write off the cost or valuation of assets less their residual values over their useful lives on the following bases:
Freehold land and buildings
No depreciation was charged as the property was sold at its carrying amount.
Plant and equipment
Over 5-10 years
Fixtures and fittings
Over the life of the shop lease
The gain or loss arising on the disposal of an asset is determined as the difference between the sale proceeds and the carrying value of the asset, and is credited or charged to profit or loss.
1.6
Fixed asset investments
Interests in subsidiaries, associates and jointly controlled entities are initially measured at cost and subsequently measured at cost less any accumulated impairment losses. The investments are assessed for impairment at each reporting date and any impairment losses or reversals of impairment losses are recognised immediately in profit or loss.
A subsidiary is an entity controlled by the company. Control is the power to govern the financial and operating policies of the entity so as to obtain benefits from its activities.
An associate is an entity, being neither a subsidiary nor a joint venture, in which the company holds a long-term interest and where the company has significant influence. The company considers that it has significant influence where it has the power to participate in the financial and operating decisions of the associate.
Entities in which the company has a long term interest and shares control under a contractual arrangement are classified as jointly controlled entities.
1.7
Impairment of fixed assets
At each reporting period end date, the company reviews the carrying amounts of its tangible and intangible assets to determine whether there is any indication that those assets have suffered an impairment loss. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment loss (if any). Where it is not possible to estimate the recoverable amount of an individual asset, the company estimates the recoverable amount of the cash-generating unit to which the asset belongs.
Recoverable amount is the higher of fair value less costs to sell and value in use. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset for which the estimates of future cash flows have not been adjusted.
If the recoverable amount of an asset (or cash-generating unit) is estimated to be less than its carrying amount, the carrying amount of the asset (or cash-generating unit) is reduced to its recoverable amount. An impairment loss is recognised immediately in profit or loss, unless the relevant asset is carried at a revalued amount, in which case the impairment loss is treated as a revaluation decrease.
Recognised impairment losses are reversed if, and only if, the reasons for the impairment loss have ceased to apply. Where an impairment loss subsequently reverses, the carrying amount of the asset (or cash-generating unit) is increased to the revised estimate of its recoverable amount, but so that the increased carrying amount does not exceed the carrying amount that would have been determined had no impairment loss been recognised for the asset (or cash-generating unit) in prior years. A reversal of an impairment loss is recognised immediately in profit or loss, unless the relevant asset is carried at a revalued amount, in which case the reversal of the impairment loss is treated as a revaluation increase.
STERLING MEAT COMPANY LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
1
Accounting policies
(Continued)
- 14 -
1.8
Stocks
Stocks are stated at the lower of cost and estimated selling price less costs to complete and sell. Cost comprises direct materials and, where applicable, direct labour costs and those overheads that have been incurred in bringing the stocks to their present location and condition.
Stocks held for distribution at no or nominal consideration are measured at the lower of cost and replacement cost, adjusted where applicable for any loss of service potential.
At each reporting date, an assessment is made for impairment. Any excess of the carrying amount of stocks over its estimated selling price less costs to complete and sell is recognised as an impairment loss in profit or loss. Reversals of impairment losses are also recognised in profit or loss.
1.9
Cash and cash equivalents
Cash and cash equivalents are basic financial assets and include cash in hand, deposits held at call with banks, other short-term liquid investments with original maturities of three months or less, and bank overdrafts. Bank overdrafts are shown within borrowings in current liabilities.
1.10
Financial instruments
The company has elected to apply the provisions of Section 11 ‘Basic Financial Instruments’ and Section 12 ‘Other Financial Instruments Issues’ of FRS 102 to all of its financial instruments.
Financial instruments are recognised in the company's balance sheet when the company becomes party to the contractual provisions of the instrument.
Financial assets and liabilities are offset, with the net amounts presented in the financial statements, when there is a legally enforceable right to set off the recognised amounts and there is an intention to settle on a net basis or to realise the asset and settle the liability simultaneously.
Basic financial assets
Basic financial assets, which include debtors and cash and bank balances, are initially measured at transaction price including transaction costs and are subsequently carried at amortised cost using the effective interest method unless the arrangement constitutes a financing transaction, where the transaction is measured at the present value of the future receipts discounted at a market rate of interest. Financial assets classified as receivable within one year are not amortised.
Other financial assets
Other financial assets, including investments in equity instruments which are not subsidiaries, associates or joint ventures, are initially measured at fair value, which is normally the transaction price. Such assets are subsequently carried at fair value and the changes in fair value are recognised in profit or loss, except that investments in equity instruments that are not publicly traded and whose fair values cannot be measured reliably are measured at cost less impairment.
STERLING MEAT COMPANY LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
1
Accounting policies
(Continued)
- 15 -
Impairment of financial assets
Financial assets, other than those held at fair value through profit and loss, are assessed for indicators of impairment at each reporting end date.
Financial assets are impaired where there is objective evidence that, as a result of one or more events that occurred after the initial recognition of the financial asset, the estimated future cash flows have been affected. If an asset is impaired, the impairment loss is the difference between the carrying amount and the present value of the estimated cash flows discounted at the asset’s original effective interest rate. The impairment loss is recognised in profit or loss.
If there is a decrease in the impairment loss arising from an event occurring after the impairment was recognised, the impairment is reversed. The reversal is such that the current carrying amount does not exceed what the carrying amount would have been, had the impairment not previously been recognised. The impairment reversal is recognised in profit or loss.
Derecognition of financial assets
Financial assets are derecognised only when the contractual rights to the cash flows from the asset expire or are settled, or when the company transfers the financial asset and substantially all the risks and rewards of ownership to another entity, or if some significant risks and rewards of ownership are retained but control of the asset has transferred to another party that is able to sell the asset in its entirety to an unrelated third party.
Classification of financial liabilities
Financial liabilities and equity instruments are classified according to the substance of the contractual arrangements entered into. An equity instrument is any contract that evidences a residual interest in the assets of the company after deducting all of its liabilities.
Basic financial liabilities
Basic financial liabilities, including creditors, bank loans, loans from fellow group companies and preference shares that are classified as debt, are initially recognised at transaction price unless the arrangement constitutes a financing transaction, where the debt instrument is measured at the present value of the future payments discounted at a market rate of interest. Financial liabilities classified as payable within one year are not amortised.
Debt instruments are subsequently carried at amortised cost, using the effective interest rate method.
Trade creditors are obligations to pay for goods or services that have been acquired in the ordinary course of business from suppliers. Amounts payable are classified as current liabilities if payment is due within one year or less. If not, they are presented as non-current liabilities. Trade creditors are recognised initially at transaction price and subsequently measured at amortised cost using the effective interest method.
Other financial liabilities
Derivatives, including interest rate swaps and forward foreign exchange contracts, are not basic financial instruments. Derivatives are initially recognised at fair value on the date a derivative contract is entered into and are subsequently re-measured at their fair value. Changes in the fair value of derivatives are recognised in profit or loss in finance costs or finance income as appropriate, unless hedge accounting is applied and the hedge is a cash flow hedge.
Debt instruments that do not meet the conditions in FRS 102 paragraph 11.9 are subsequently measured at fair value through profit or loss. Debt instruments may be designated as being measured at fair value through profit or loss to eliminate or reduce an accounting mismatch or if the instruments are measured and their performance evaluated on a fair value basis in accordance with a documented risk management or investment strategy.
STERLING MEAT COMPANY LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
1
Accounting policies
(Continued)
- 16 -
Derecognition of financial liabilities
Financial liabilities are derecognised when the company’s contractual obligations expire or are discharged or cancelled.
1.11
Equity instruments
Equity instruments issued by the company are recorded at the proceeds received, net of transaction costs. Dividends payable on equity instruments are recognised as liabilities once they are no longer at the discretion of the company.
1.12
Taxation
The tax expense represents the sum of the tax currently payable and deferred tax.
Current tax
The tax currently payable is based on taxable profit for the year. Taxable profit differs from net profit as reported in the profit and loss account because it excludes items of income or expense that are taxable or deductible in other years and it further excludes items that are never taxable or deductible. The company’s liability for current tax is calculated using tax rates that have been enacted or substantively enacted by the reporting end date.
Deferred tax
Deferred tax liabilities are generally recognised for all timing differences and deferred tax assets are recognised to the extent that it is probable that they will be recovered against the reversal of deferred tax liabilities or other future taxable profits. Such assets and liabilities are not recognised if the timing difference arises from goodwill or from the initial recognition of other assets and liabilities in a transaction that affects neither the tax profit nor the accounting profit.
The carrying amount of deferred tax assets is reviewed at each reporting end date and reduced to the extent that it is no longer probable that sufficient taxable profits will be available to allow all or part of the asset to be recovered. Deferred tax is calculated at the tax rates that are expected to apply in the period when the liability is settled or the asset is realised. Deferred tax is charged or credited in the profit and loss account, except when it relates to items charged or credited directly to equity, in which case the deferred tax is also dealt with in equity. Deferred tax assets and liabilities are offset when the company has a legally enforceable right to offset current tax assets and liabilities and the deferred tax assets and liabilities relate to taxes levied by the same tax authority.
1.13
Employee benefits
The costs of short-term employee benefits are recognised as a liability and an expense, unless those costs are required to be recognised as part of the cost of stock or fixed assets.
The cost of any unused holiday entitlement is recognised in the period in which the employee’s services are received.
Termination benefits are recognised immediately as an expense when the company is demonstrably committed to terminate the employment of an employee or to provide termination benefits.
1.14
Retirement benefits
Payments to defined contribution retirement benefit schemes are charged as an expense as they fall due.
STERLING MEAT COMPANY LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
1
Accounting policies
(Continued)
- 17 -
1.15
Leases
Rentals payable under operating leases, including any lease incentives received, are charged to profit or loss on a straight line basis over the term of the relevant lease except where another more systematic basis is more representative of the time pattern in which economic benefits from the leases asset are consumed.
2
Judgements and key sources of estimation uncertainty
In the application of the company’s accounting policies, the directors are required to make judgements, estimates and assumptions about the carrying amount of assets and liabilities that are not readily apparent from other sources. The estimates and associated assumptions are based on historical experience and other factors that are considered to be relevant. Actual results may differ from these estimates.
The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised where the revision affects only that period, or in the period of the revision and future periods where the revision affects both current and future periods.
Key sources of estimation uncertainty
The estimates and assumptions which have a significant risk of causing a material adjustment to the carrying amount of assets and liabilities are as follows.
Useful economic lives
The useful economic lives of tangible fixed assets are assessed on an annual basis on the latest available information. Management believe that the useful economic lives being used are still appropriate.
3
Turnover and other revenue
2023
2022
£
£
Turnover analysed by class of business
Retail sale of meat and meat products
22,846,342
14,805,519
2023
2022
£
£
Turnover analysed by geographical market
United Kingdom
22,846,342
14,805,519
2023
2022
£
£
Other significant revenue
Interest income
1,642
-
STERLING MEAT COMPANY LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
- 18 -
4
Operating profit
2023
2022
Operating profit for the year is stated after charging:
£
£
Fees payable to the company's auditor for the audit of the company's financial statements
14,500
14,932
Depreciation of owned tangible fixed assets
183,514
107,107
Loss on disposal of tangible fixed assets
103,615
11,606
Loss on disposal of investment property
1
Operating lease charges
349,634
328,968
5
Employees
The average monthly number of persons (including directors) employed by the company during the year was:
2023
2022
Number
Number
Senior management team
7
7
Office Admin
2
3
Head Office Depot
7
4
Store Managers/Assistant Managers
26
21
Shop Colleagues
161
111
Total
203
146
Their aggregate remuneration comprised:
2023
2022
£
£
Wages and salaries
3,872,260
2,620,166
Social security costs
288,523
211,325
Pension costs
62,419
45,217
4,223,202
2,876,708
6
Directors' remuneration
No remuneration was paid to the directors.
7
Interest receivable and similar income
2023
2022
£
£
Interest income
Interest on bank deposits
1,534
Other interest income
108
Total income
1,642
STERLING MEAT COMPANY LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
7
Interest receivable and similar income
(Continued)
- 19 -
2023
2022
Investment income includes the following:
£
£
Interest on financial assets not measured at fair value through profit or loss
1,534
8
Interest payable and similar expenses
2023
2022
£
£
Interest on financial liabilities measured at amortised cost:
Other interest on financial liabilities
15,474
29,893
9
Taxation
2023
2022
£
£
Current tax
UK corporation tax on profits for the current period
249,355
69,033
Deferred tax
Origination and reversal of timing differences
81,658
87,036
Total tax charge
331,013
156,069
From 1 April 2023, the corporation tax rate changed; companies with chargeable taxable profits below £50,000 will continue to pay corporation tax at a rate of 19% and companies with chargeable taxable profits of £250,000 or more will pay corporation tax at a rate of 25%.
The taxable profits have therefore been apportioned such that 3 months have been taxed at a rate of 19%, and 9 months have been taxed at the current rate of 25% based on the number of days pre-1 April 2023.
STERLING MEAT COMPANY LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
9
Taxation
(Continued)
- 20 -
The actual charge for the year can be reconciled to the expected charge for the year based on the profit or loss and the standard rate of tax as follows:
2023
2022
£
£
Profit before taxation
1,337,412
674,884
Expected tax charge based on the standard rate of corporation tax in the UK of 23.52% (2022: 19.00%)
314,559
128,228
Tax effect of expenses that are not deductible in determining taxable profit
29,113
2,787
Permanent capital allowances in excess of depreciation
(86,883)
(62,026)
Tax effect of movement in provisions
44
Movement on deferred tax
81,665
87,036
Revenue items capitalised
(7,441)
Taxation charge for the year
331,013
156,069
10
Dividends
2023
2022
£
£
Final paid
1,080,000
11
Intangible fixed assets
Goodwill
£
Cost
At 1 January 2023 and 31 December 2023
2
Amortisation and impairment
At 1 January 2023 and 31 December 2023
2
Carrying amount
At 31 December 2023
At 31 December 2022
STERLING MEAT COMPANY LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
- 21 -
12
Tangible fixed assets
Freehold land and buildings
Plant and equipment
Fixtures and fittings
Total
£
£
£
£
Cost or valuation
At 1 January 2023
200,000
453,622
571,347
1,224,969
Additions
136,247
530,801
667,048
Disposals
(200,000)
(43,391)
(216,559)
(459,950)
At 31 December 2023
546,478
885,589
1,432,067
Depreciation and impairment
At 1 January 2023
145,455
162,419
307,874
Depreciation charged in the year
77,475
106,039
183,514
Eliminated in respect of disposals
(34,934)
(134,887)
(169,821)
At 31 December 2023
187,996
133,571
321,567
Carrying amount
At 31 December 2023
358,482
752,018
1,110,500
At 31 December 2022
200,000
308,167
408,928
917,095
13
Fixed asset investments
2023
2022
£
£
Other investments
1
Movements in fixed asset investments
Other
£
Cost or valuation
At 1 January 2023
1
Disposals
(1)
At 31 December 2023
-
Carrying amount
At 31 December 2023
-
At 31 December 2022
1
14
Stocks
2023
2022
£
£
Raw materials and consumables
441,038
415,765
STERLING MEAT COMPANY LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
- 22 -
15
Debtors
2023
2022
Amounts falling due within one year:
£
£
Trade debtors
1,540
Other debtors
103,685
228,751
Prepayments and accrued income
309,062
154,195
414,287
382,946
16
Creditors: amounts falling due within one year
2023
2022
Notes
£
£
Other borrowings
18
57,001
85,936
Trade creditors
794,318
329,380
Corporation tax
249,269
69,033
Other taxation and social security
139,302
72,881
Other creditors
70,843
5,308
Accruals and deferred income
142,024
75,660
1,452,757
638,198
17
Creditors: amounts falling due after more than one year
2023
2022
Notes
£
£
Other borrowings
18
168,118
388,930
18
Loans and overdrafts
2023
2022
£
£
Other loans
225,119
474,866
Payable within one year
57,001
85,936
Payable after one year
168,118
388,930
The long-term loans are secured by a company guarantee from Sterling Foods To Go Ltd.
STERLING MEAT COMPANY LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
- 23 -
19
Deferred taxation
The following are the major deferred tax liabilities and assets recognised by the company and movements thereon:
Liabilities
Liabilities
2023
2022
Balances:
£
£
Accelerated capital allowances
203,892
122,234
2023
Movements in the year:
£
Liability at 1 January 2023
122,234
Charge to profit or loss
81,658
Liability at 31 December 2023
203,892
20
Retirement benefit schemes
2023
2022
Defined contribution schemes
£
£
Charge to profit or loss in respect of defined contribution schemes
62,419
45,217
The company operates a defined contribution pension scheme for all qualifying employees. The assets of the scheme are held separately from those of the company in an independently administered fund.
21
Share capital
2023
2022
2023
2022
Ordinary share capital
Number
Number
£
£
Issued and fully paid
Ordinary of £1 each
100
100
100
100
22
Operating lease commitments
Lessee
At the reporting end date the company had outstanding commitments for future minimum lease payments under non-cancellable operating leases, which fall due as follows:
2023
2022
£
£
Within one year
442,720
349,698
Between two and five years
1,326,988
1,122,296
In over five years
572,000
706,917
2,341,708
2,178,911
STERLING MEAT COMPANY LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
- 24 -
23
Related party transactions
Included within trade creditors is an amount of £4,406 (2022: £Nil) owed to Cribbin Family Butchers Limited, a company in which Thomas Cribbin is a director.
Management fees of £42,025 (2022: £Nil) were paid to Cribbin Family Butchers (Holdings) Limited during the year, a company in which Thomas Cribbin is a director.
24
Ultimate controlling party
Sterling Meat Company Limited is a wholly owned subsidiary of NEE Investment Company Limited, a company registered in Ireland. There is no ultimate controlling party.
25
Cash generated from operations
2023
2022
£
£
Profit for the year after tax
1,006,399
518,815
Adjustments for:
Taxation charged
331,013
156,069
Finance costs
15,474
29,893
Investment income
(1,642)
Loss on disposal of tangible fixed assets
103,615
11,606
Loss on disposal of investment property
1
Depreciation and impairment of tangible fixed assets
183,514
107,107
Movements in working capital:
Increase in stocks
(25,273)
(39,440)
Increase in debtors
(31,341)
(149,100)
Increase/(decrease) in creditors
663,258
(519,065)
Cash generated from operations
2,245,018
115,885
26
Analysis of changes in net funds/(debt)
1 January 2023
Cash flows
31 December 2023
£
£
£
Cash at bank and in hand
415,913
351,786
767,699
Borrowings excluding overdrafts
(474,866)
249,747
(225,119)
(58,953)
601,533
542,580
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