Company registration number 01814713 (England and Wales)
FIRST NATURAL BRANDS LTD
ANNUAL REPORT AND FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 APRIL 2023
FIRST NATURAL BRANDS LTD
COMPANY INFORMATION
Directors
Mr S Shah
Mr R Russell
Company number
01814713
Registered office
Millennium House
Unit 2, King Business Centre
Reeds Lane, Sayers Common
Hassocks
West Sussex
BN6 9LS
Auditor
Plummer Parsons Accountants Limited
4 Frederick Terrace
Frederick Place
Brighton
East Sussex
BN1 1AX
Business address
Millennium House
Unit 2, King Business Centre
Reeds Lane, Sayers Common
Hassocks
West Sussex
BN6 9LS
FIRST NATURAL BRANDS LTD
CONTENTS
Page
Strategic report
1 - 2
Directors' report
3 - 4
Directors' responsibilities statement
5
Independent auditor's report
6 - 9
Statement of comprehensive income
10
Statement of financial position
11
Statement of changes in equity
12
Notes to the financial statements
13 - 30
FIRST NATURAL BRANDS LTD
STRATEGIC REPORT
FOR THE YEAR ENDED 30 APRIL 2023
- 1 -
The directors present the strategic report for the year ended 30 April 2023.
Review of the business
During the year, net sales have decreased by 17.3% to £8.1 million (2022: £9.8 million) following the material disruption in the last year due to the Russian invasion of Ukraine and the subsequent material impacts of the cost of living crisis. Since the year end sales have, however, stabilised and we expect to return to a recovery in the next 12 months. The company’s main customers remain high quality UK retailers including Holland & Barrett, Boots, Waitrose and Amazon. The company sells products under it’s own Tisserand brand and also undertakes contract manufacturing work for selected retailers.
The company operates in the natural health and wellbeing market and remains one of the leading operators in the essential oil market. The company blends, bottles and undertakes product development work to provide natural wellbeing solutions for everyday problems such as sleep and stress. During the year, the company bottled over 3.5 million products and retains capacity to bottle over 10 million units.
During the year, the company exited product areas with externally made product in the home care sectors and exited low gross margin volume business in the USA. The company saw sales to one of it’s major customers decline by over £1 million during the year as the customer significantly over ordered during the prior year. Sales to this customer are recovering with sales increasing by over 70% in the year with further growth expected in the year ended 30 April 2025. Performance at other customers remained broadly flat despite the material turbulent external events impacting high street stores and consumers moving to lower priced and lower margin private label customers
The impact of the war and subsequent cost of living crisis was multifold, with demand reducing significantly and supply chain commitments leading to short term overstocks, which are being unwound through reduced purchasing and a reduction in personnel. Material cost inflation was felt due to the inflationary impact of the cost of materials, labour, energy and transport costs. Whilst the company has increased selling prices in response, there is a significant lag between cost price increases and selling price increases with the company being forced to absorb higher cost prices for a significant period as large retailers increased their retail pricing more quickly than absorbing increases from suppliers. Gross margin was negatively impacted by these influences with gross margin decreasing to 27.6%.
Distribution and logistics costs were negatively impacted with transport costs increasing materially through the year and a fixed logistics cost which was under utilised against the demand as well as material excess storage charges as commitments were forced on to the company ahead of the demand.
Overhead investment continues as the company operates under multiple globally accredited quality standards including ISO 9001, ISO22716 and ISO14001. The company believes achievement of these accreditations will support it’s position as a key supplier to UK retailers.
Adjusted EBITDA has reduced to a loss of £0.45 million (2022: loss £0.08 million) with EBITDA margins similarly reducing to -5.5% (2022: -0.9%).
FIRST NATURAL BRANDS LTD
STRATEGIC REPORT (CONTINUED)
FOR THE YEAR ENDED 30 APRIL 2023
- 2 -
Key performance indicators
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Add back: Share based payments | | | |
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Add back: Exceptional costs | | | |
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* Adjusted EBITDA is after share based payment expense and exceptional costs.
Other information and explanations
Future developments
The company renewed a contract with it’s largest customer shortly after year end. The trading environment continued to be difficult during the year ended 30 April 2024, and, as a result, sales declined by a further 6% or approximately £400,000. The company has, however, also entered into new distribution contracts to expand into the USA in particular and remains focused on the higher growth wellbeing markets exiting highly competitive and lower margin product areas.
To support the recovery of the company, the company raised £0.5 million from it’s shareholders after the balance sheet date to ensure financial liquidity was maintained as it recovers from the material impacts felt during the year.
Mr R Russell
Director
30 July 2024
FIRST NATURAL BRANDS LTD
DIRECTORS' REPORT
FOR THE YEAR ENDED 30 APRIL 2023
- 3 -
The directors present their annual report and financial statements for the year ended 30 April 2023.
Principal activities
The principal activity of the company continued to be that of the bottling, marketing and sales of essential oils and personal care products under the "Tisserand" brand and under contract for third parties; the marketing and sales of specialised skin care products under the "Barefood SOS" brand; and the distribution of natural home care products under the "Colibri" and "Maroma" brands.
Results and dividends
The results for the year are set out on page 10.
No ordinary dividends were paid. The directors do not recommend payment of a final dividend.
Directors
The directors who held office during the year and up to the date of signature of the financial statements were as follows:
Mr S Shah
Mr R Russell
Qualifying third party indemnity provisions
The directors benefit from a qualifying indemnity provision in the form permitted by section 234 of the Companies Act 2006 in respect of certain third party actions against the directors. No claim or notice of claim in respect of these indemnities has been received in the year. The qualifying indemnity provision was in force throughout the financial year and up to the date of approval of the Directors' Report.
Research and development
Expenditure on research activities is recognised as an expense in the period in which it is incurred. In accordance with FRS 102, section 18 'Intangible Assets other than Goodwill', internally generated intangible assets will be capitalised: (i) where an asset has entered the development phase and the expected future expected economic benefits are attributable to the asset; (ii) it is probable that the future economic benefits of the asset will flow to the group; and (iii) the costs of the asset can be measured reliably. internally generated intangible assets are amortised on a straight-line basis over the useful lives of between one and five years in line with the expected product cycle of each produce. Where no internally generated intangible assets can be recognised, development expenditure is recognised as an expense in the period in which it incurred. The development expense incurred during the year was £1,610 credit (2022: £1,918 credit).
FIRST NATURAL BRANDS LTD
DIRECTORS' REPORT (CONTINUED)
FOR THE YEAR ENDED 30 APRIL 2023
- 4 -
Going concern
The directors consider that potential sources of uncertainty include the continuing consequences of Brexit, Covid 19, environmental sustainability , geopolitical events and the continuing squeeze on customers’ finances due to the cost of living crisis. Overall, the directors consider the trading environment to be challenging.
The company made a substantial loss in the year and draft accounts indicate that the company made a reduced loss of approximately £0.7 million in the year ended 30 April 2024. As a result, the company’s total liabilities exceeded its total assets as at that date by approximately £75,000. The directors have instigated a series of cost cutting measures and have discontinued low margin products in order to increase overall profitability.
The parent company, First Natural Limited, has given the company an unlimited guarantee to secure all liabilities of First Natural Brands Limited.
Presently, the group is in breach of its loan covenants with regards to amounts owing to its bankers, Santander plc, who have indicated their willingness to work together with the group to improve its finances though they have not waived the covenant breaches. The group is dependent upon the continuing support of its bankers.
The directors are in the process of trying to secure additional finance either from shareholders and/ or new investors.
As a result of the above, the directors consider it appropriate to prepare the financial statements on a going concern basis.
Strategic report
The company has chosen in accordance with Companies Act 2006, s. 414C(11) to set out in the company's strategic report information required by Large and Medium-sized Companies and Groups (Accounts and Reports) Regulations 2008, Sch. 7 to be contained in the directors' report. It has done so in respect of the business review and future developments..
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.
Medium-sized companies exemption
This report has been prepared in accordance with the provisions applicable to companies entitled to the medium-sized companies exemption.
On behalf of the board
Mr R Russell
Director
30 July 2024
FIRST NATURAL BRANDS LTD
DIRECTORS' RESPONSIBILITIES STATEMENT
FOR THE YEAR ENDED 30 APRIL 2023
- 5 -
The directors are responsible for preparing the annual report and the financial statements in accordance with applicable law and regulations.
Company law requires the directors to prepare financial statements for each financial year. Under that law the directors have elected to prepare the financial statements in accordance with United Kingdom Generally Accepted Accounting Practice (United Kingdom Accounting Standards and applicable law). Under company law the directors must not approve the financial statements unless they are satisfied that they give a true and fair view of the state of affairs of the company and of the profit or loss of the company for that period. In preparing these financial statements, the directors are required to:
select suitable accounting policies and then apply them consistently;
make judgements and accounting estimates that are reasonable and prudent;
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.
On behalf of the board
Mr R Russell
Director
30 July 2024
FIRST NATURAL BRANDS LTD
INDEPENDENT AUDITOR'S REPORT
TO THE MEMBERS OF FIRST NATURAL BRANDS LTD
- 6 -
Opinion
We have audited the financial statements of First Natural Brands Ltd (the 'company') for the year ended 30 April 2023 which comprise the statement of comprehensive income, the statement of financial position, the statement of changes in equity and 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 30 April 2023 and of its loss 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.
Material uncertainty related to going concern
We draw attention to Note 1.2 in the financial statements, which indicates that the company incurred a net loss of £0.7 million during the year ended 30 April 2024 and, as of that date, the company's total liabilities exceeded its total assets by £75,000. As stated in Note 1.2, these events or conditions, along with other matters as set forth in Note 1.2, indicate that a material uncertainty exists that may cast significant doubt on the company's ability to continue trading as a going concern. Our opinion is not modified in respect of this matter.
Key audit matters
Except for the matters described in the Material uncertainty related to going concern section, we have determined that there are no other key audit matters to be communicated in our 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.
FIRST NATURAL BRANDS LTD
INDEPENDENT AUDITOR'S REPORT
TO THE MEMBERS OF FIRST NATURAL BRANDS LTD (CONTINUED)
- 7 -
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.
The objectives of our audit are to identify and assess the risks of material misstatement of the financial statements due to fraud or error; to obtain sufficient appropriate audit evidence regarding the assessed risks of material misstatement due to fraud or error; and to respond appropriately to those risks. The extent to which our procedures are capable of detecting such irregularities is detailed below:
Based on our understanding of the company and industry, and through discussion with the directors and other management (as required by auditing standards), we identified that the principal risks of non-compliance with laws and regulations related to the Companies Act 2006, employment law, Data Protection Act, GDPR, and other relevant legislation.
We considered the extent to which non-compliance might have a material effect on the financial statements. We also considered those laws and regulations that have a direct impact on the preparation of the financial statements, being FRS 102. We communicated identified laws and regulations throughout our team and remained alert to any indications of non-compliance throughout the audit.
FIRST NATURAL BRANDS LTD
INDEPENDENT AUDITOR'S REPORT
TO THE MEMBERS OF FIRST NATURAL BRANDS LTD (CONTINUED)
- 8 -
We evaluated management’s incentives and opportunities for fraudulent manipulation of the financial statements (including the risk of override of controls), and determined that the principal risks were related to posting inappropriate journal entries to increase income or reduce expenditure, related party transactions, management bias in accounting estimates and judgemental areas of the financial statements. Audit procedures performed by the engagement team included:
A review of relevant correspondence, including correspondence with HM Revenue & Customs, for signs of potential non-compliance with laws and regulations; and
A review of specific nominal codes within the accounting records that would highlight costs associated with non-compliance of relevant laws and regulations; and
Assessment of identified fraud risk factors; and
Challenging assumptions and judgements made by management in its significant accounting estimates; and
Performing analytical procedures to identify any unusual or unexpected relationships, including related party transactions, that may indicate risks of material misstatement due to fraud; and
Confirmation of related parties with management, and review of transactions throughout the period to identify any previously undisclosed transactions with related parties outside the normal course of business; and
Review of significant and unusual transactions and evaluation of the underlying financial rationale supporting the transactions; and
Identifying and testing journal entries, in particular any manual entries made at the year-end for financial statement preparation, as well as throughout the year.
There are inherent limitations in the audit procedures described above and the further removed non-compliance with laws and regulations is from the events and transactions reflected in the financial statements, the less likely we would become aware of it. Also, the risk of not detecting a material misstatement due to fraud is higher than the risk of not detecting one resulting from error, as fraud may involve deliberate concealment by, for example, forgery or intentional misrepresentations, or through collusion.
As part of an audit in accordance with ISAs (UK), we exercise professional judgment and maintain professional scepticism throughout the audit. We also:
FIRST NATURAL BRANDS LTD
INDEPENDENT AUDITOR'S REPORT
TO THE MEMBERS OF FIRST NATURAL BRANDS LTD (CONTINUED)
- 9 -
Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.
Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion of the effectiveness of the company’s internal control.
Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by the directors.
Conclude on the appropriateness of the directors' use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the company's ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our Auditor's report to the related disclosures in the financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our Auditor's report. However, future events or conditions may cause the company to cease to continue as a going concern.
Evaluate the overall presentation, structure and content of the financial statements, including the disclosures, and whether the financial statements represent the underlying transactions and events in a manner that achieves fair presentation.
We communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit.
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.
Steven Griffen FCA FCCA
Senior Statutory Auditor
For and on behalf of Plummer Parsons Accountants Limited
31 July 2024
Chartered Accountants
Statutory Auditor
4 Frederick Terrace
Frederick Place
Brighton
East Sussex
BN1 1AX
FIRST NATURAL BRANDS LTD
STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEAR ENDED 30 APRIL 2023
- 10 -
2023
2022
Notes
£
£
Revenue
3
8,075,331
9,768,967
Cost of sales
(5,845,771)
(6,723,287)
Gross profit
2,229,560
3,045,680
Distribution costs
(27,052)
(43,776)
Administrative expenses
(3,126,284)
(3,354,061)
Other operating income
600,000
31,995
Exceptional item
4
(108,930)
Operating loss
5
(323,776)
(429,092)
Finance costs
9
(340,700)
(287,009)
Loss before taxation
(664,476)
(716,101)
Tax on loss
10
114,853
283,660
Loss for the financial year
(549,623)
(432,441)
The income statement has been prepared on the basis that all operations are continuing operations.
FIRST NATURAL BRANDS LTD
STATEMENT OF FINANCIAL POSITION
AS AT 30 APRIL 2023
30 April 2023
- 11 -
2023
2022
Notes
£
£
£
£
Non-current assets
Intangible assets
11
628,741
505,284
Property, plant and equipment
12
437,774
580,824
1,066,515
1,086,108
Current assets
Inventories
13
1,979,666
2,265,807
Trade and other receivables
14
2,748,659
2,614,761
Cash and cash equivalents
180,858
516,702
4,909,183
5,397,270
Current liabilities
15
(3,259,730)
(3,343,608)
Net current assets
1,649,453
2,053,662
Total assets less current liabilities
2,715,968
3,139,770
Non-current liabilities
16
(2,090,077)
(1,964,256)
Net assets
625,891
1,175,514
Equity
Called up share capital
22
100,000
100,000
Other reserves
13,398
13,398
Retained earnings
512,493
1,062,116
Total equity
625,891
1,175,514
These financial statements have been prepared in accordance with the provisions relating to medium-sized companies.
The financial statements were approved by the board of directors and authorised for issue on 30 July 2024 and are signed on its behalf by:
Mr R Russell
Director
Company registration number 01814713 (England and Wales)
FIRST NATURAL BRANDS LTD
STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 30 APRIL 2023
- 12 -
Share capital
Other reserves
Retained earnings
Total
£
£
£
£
Balance at 1 May 2021
100,000
22,950
1,494,557
1,617,507
Year ended 30 April 2022:
Loss and total comprehensive income
-
-
(432,441)
(432,441)
Share based payments
-
(9,552)
(9,552)
Balance at 30 April 2022
100,000
13,398
1,062,116
1,175,514
Year ended 30 April 2023:
Loss and total comprehensive income
-
-
(549,623)
(549,623)
Balance at 30 April 2023
100,000
13,398
512,493
625,891
FIRST NATURAL BRANDS LTD
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 APRIL 2023
- 13 -
1
Accounting policies
Company information
First Natural Brands Ltd is a private company limited by shares incorporated in England and Wales. The registered office is Millennium House, Unit 2, King Business Centre, Reeds Lane, Sayers Common, Hassocks, West Sussex, BN6 9LS.
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, [modified to include the revaluation of freehold properties and to include investment properties and certain financial instruments at fair value]. The principal accounting policies adopted are set out below.
This company is a qualifying entity for the purposes of FRS 102, being a member of a group where the parent of that group prepares publicly available consolidated financial statements, including this company, which are intended to give a true and fair view of the assets, liabilities, financial position and profit or loss of the group. The company has therefore taken advantage of exemptions from the following disclosure requirements:
Section 7 ‘Statement of Cash Flows’: Presentation of a statement of cash flow and related notes and disclosures;
Section 11 ‘Basic Financial Instruments’ and Section 12 ‘Other Financial Instrument Issues: Interest income/expense and net gains/losses for financial instruments not measured at fair value; basis of determining fair values; details of collateral, loan defaults or breaches, details of hedges, hedging fair value changes recognised in profit or loss and in other comprehensive income;
Section 26 ‘Share based Payment’: Share-based payment expense charged to profit or loss, reconciliation of opening and closing number and weighted average exercise price of share options, how the fair value of options granted was measured, measurement and carrying amount of liabilities for cash-settled share-based payments, explanation of modifications to arrangements;
Section 33 ‘Related Party Disclosures’: Compensation for key management personnel.
The financial statements of the company are consolidated in the financial statements of First Natural Limited. These consolidated financial statements may be obtained from Companies House at: https://find-and-update.company-information.service.gov.uk/ .
FIRST NATURAL BRANDS LTD
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 30 APRIL 2023
1
Accounting policies
(Continued)
- 14 -
1.2
Going concern
These financial statements are prepared on the going concern basis. The directors have a reasonable expectation that the company will continue in operational existence for the foreseeable future. However, the directors are aware of certain material uncertainties which may cause doubt on the company's ability to continue as a going concern.
The directors consider that potential sources of uncertainty include the continuing consequences of Brexit, Covid 19, environmental sustainability , geopolitical events and the continuing squeeze on customers’ finances due to the cost of living crisis. Overall, the directors consider the trading environment to be challenging.
The company made a substantial loss in the year and draft accounts indicate that the company made a reduced loss of approximately £0.7 million in the year ended 30 April 2024. As a result, the company’s total liabilities exceeded its total assets as at that date by approximately £75,000. The directors have instigated a series of cost cutting measures and have discontinued low margin products in order to increase overall profitability.
The parent company, First Natural Limited, has given the company an unlimited guarantee to secure all liabilities of First Natural Brands Limited.
Presently, the group is in breach of its loan covenants with regards to amounts owing to its bankers, Santander plc, who have indicated their willingness to work together with the group to improve its finances though they have not waived the covenant breaches. The group is dependent upon the continuing support of its bankers.
The directors are in the process of trying to secure additional finance either from shareholders and/ or new investors.
As a result of the above, the directors consider it appropriate to prepare the financial statements on a going concern basis.
1.3
Revenue
Revenue is recognised at the fair value of the consideration received or receivable for goods and services provided in the normal course of business, and is shown net of VAT and other sales related taxes. The fair value of consideration takes into account trade discounts, settlement discounts and volume rebates.
When cash inflows are deferred and represent a financing arrangement, the fair value of the consideration is the present value of the future receipts. The difference between the fair value of the consideration and the nominal amount received is recognised as interest income.
Turnover from the sale of goods is recognised when all of the following conditions are satisfied:
The group has transferred the significant risks and rewards of ownership to the buyer;
The group retains neither continuing managerial involvement to the degree usually associated with ownership nor effective control over the goods sold;
The amount of turnover can be measured reliably;
It is probable that the group will receive consideration due under the transaction; and
The costs incurred or to be incurred in respect of the transaction can be measured reliably.
FIRST NATURAL BRANDS LTD
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 30 APRIL 2023
1
Accounting policies
(Continued)
- 15 -
1.4
Research and development expenditure
In the research phase of an internal project, it is not possible to demonstrate that the project will generate future economic benefits and, hence, all expenditure on research shall be recognised as an expense when it it incurred. Related enhanced tax claims are treated as grants, and recognised within 'Other operating income' in the financial statements.
Intangible assets are recognised from the development phase of a project if and only if certain specific criteria are met in order to demonstrate the asset will generate probable future economic benefits, and that its cost can be realisably measured. The capitalised development costs are subsequently amortised on a straight line basis over their useful economic lives, which range from 2 to 5 years.
If it is not possible to distinguish between the research phase and the development phase of an internal project, the expenditure is treated as if it were all incurred in the research phase only.
1.5
Intangible fixed assets other than goodwill
Intangible assets are initially recognised at cost. After recognition intangible assets are measured at cost less accumulated amortisation and accumulated impairment losses.
At each reporting date, the company assesses whether there is any indication of impairment. If such indication exists, the recoverable amount of the asset is determined which is higher of its fair value less costs to sell and its value in use. An impairment loss is recognised where the carrying amount exceeds the recoverable amount.
All intangible assets are considered to have a finite useful life. if a reliable estimate of the useful life cannot be made, the useful life shall not exceed 10 years.
Amortisation 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:
Patents & licences
20% per annum
Development costs
20% - 50% per annum
Amortisation is included within the Statement of Comprehensive Income under administrative expenses.
1.6
Property, plant and equipment
Property, plant and equipment are initially measured at historical cost less accumulated depreciation and any accumulated impairment losses. Historical cost includes expenditure that is directly attributable to bringing the asset to the location and condition necessary for it to be capable of operating in the manner intended by management.
At each reporting date, the company assesses whether there is any indication of impairment. if such indication exists, the recoverable amount of the asset is determined which is the higher of its fair value less costs to sell and its value in use. An impairment loss is recognised where the carrying amount exceeds the recoverable amount.
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:
Leasehold improvements
Over the lease term
Plant and equipment
10% to 15% per annum
Fixtures and fittings
10% to 20% per annum
Computers
10% to 20% per annum
FIRST NATURAL BRANDS LTD
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 30 APRIL 2023
1
Accounting policies
(Continued)
- 16 -
The assets' residual values, useful lives and depreciation methods are reviewed, and adjusted prospectively if appropriate, or if there is an indication of a significant change since the last reporting date.
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 recognised in the Statement of Comprehensive Income.
1.7
Impairment of non-current assets
Assets that are subject to depreciation or amortisation are assessed at each reporting date to determine whether there is any indication that the assets are impaired. Where there is any indication that an asset may be impaired, the carrying value of the asset (or cash generating unit to which the asset has been allocated) is tested for impairment. An impairment loss is recognised for the amount by which the asset’s carrying amount exceeds its recoverable amount. The recoverable amount is the higher of an asset’s (or CGU’s) fair value less costs to sell and value in use. For the purposes of assessing impairment, assets are grouped at the lowest levels for which there are separately identifiable cash flows (CGUs). Non-financial assets that have been previously impaired are reviewed at each reporting date to assess whether there is any indication that the impairment losses recognised in prior periods may no longer exist or may have decreased.
1.8
Inventories
Stocks are stated at the lower of cost and net realisable value, being the estimated selling price less costs to complete and sell. Cost is based upon on the cost of purchase on a first in, first out basis. The cost of finished goods includes the cost of import duties, inbound logistics, variable production overheads (including labour), materials and an element of fixed overheads. Stocks are written off in the ordinary course of business, where there may be obsolescence due to ageing or discontinuation of product ranges.
At each reporting date, stocks area assessed for impairment. If stock is impaired, the carrying amount is reduced to its selling price less costs to complete and sell. The impairment loss is recognised immediately in the Statement of Comprehensive Income.
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 statement of financial position 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 trade and other receivables 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.
FIRST NATURAL BRANDS LTD
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 30 APRIL 2023
1
Accounting policies
(Continued)
- 17 -
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.
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 trade and other payables, 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 payables 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 payables are recognised initially at transaction price and subsequently measured at amortised cost using the effective interest method.
FIRST NATURAL BRANDS LTD
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 30 APRIL 2023
1
Accounting policies
(Continued)
- 18 -
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.
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 income statement 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 income statement, 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.
FIRST NATURAL BRANDS LTD
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 30 APRIL 2023
1
Accounting policies
(Continued)
- 19 -
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 non-current 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
The company operates a defined contribution plan for its employees. A defined contribution plan is a pension plan under which the company pays fixed contributions into a separate entity. Once the contributions have been paid the company has no further payment obligations.
The contributions are recognised as an expense in the Statement of Comprehensive Income when they fall due. Amounts not paid are shown in ‘Other creditors’ as a liability in the Statement of Financial Position. The assets of the plan are held separately from the company in independently administered funds.
1.15
Share-based payments
Where share options are awarded to employees, the fair value of the options at the date of grant is charged to profit or loss over the vesting period. Non-market vesting conditions are taken into account by adjusting the number of equity instruments expected to vest at each Statement of Financial Position date so that, ultimately, the cumulative amount recognised over the vesting period is based on the number of options that eventually vest. Market vesting conditions are factored into the fair value of the options granted. The cumulative expense is not adjusted for failure to achieve a market vesting condition.
The fair value of the award also takes into account non-vesting conditions. These are either factors beyond the control of either party (such as a target based on an index) or factors which are within the control of one or other of the parties (such as the company keeping the scheme open or the employee maintaining any contributions required by the scheme).
Where the terms and conditions of options are modified before they vest, the increase in the fair value of the options, measured immediately before and after the modification, is also charged to profit or loss over the remaining vesting period.
Where equity instruments are granted to persons other than employees, profit or loss is charged with fair value of goods and services received.
1.16
Leases
Leases are classified as finance leases whenever the terms of the lease transfer substantially all the risks and rewards of ownership to the lessees. All other leases are classified as operating leases.
Assets held under finance leases are recognised as assets at the lower of the assets fair value at the date of inception and the present value of the minimum lease payments. The related liability is included in the statement of financial position as a finance lease obligation. Lease payments are treated as consisting of capital and interest elements. The interest is charged to profit or loss so as to produce a constant periodic rate of interest on the remaining balance of the liability.
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.
FIRST NATURAL BRANDS LTD
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 30 APRIL 2023
1
Accounting policies
(Continued)
- 20 -
1.17
Foreign exchange
Transactions and balances
Foreign currency transactions are translated into the functional currency using the spot exchange rates at the dates of the transactions.
At each period end, foreign currency monetary items are translated using the closing exchange rate. Non-monetary items measured at historical cost are translated using the exchange rate applicable at the date of the transaction, and non-monetary items measured at fair value are translated using the exchange rate applicable when the fair value was determined.
Foreign exchange gains and losses resulting from the settlement of transactions and from the translations using the period end exchange rate of monetary assets and liabilities denominated in foreign currencies are recognised in the Statement of Comprehensive Income.
Foreign exchange gains and losses are presented in the Statement of Comprehensive Income within 'Administrative expenses'
1.18
Exceptional items are transactions that fall within the ordinary activities of the company but are presented separately due to their size or incidence.
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.
Assessing indicators of impairment
In assessing whether there have been any indicators of impairment of assets, the directors have considered both external and internal sources of information such as market conditions, counterparty credit ratings and experience of recoverability. There have been no indicators of impairments identified during the current financial year.
Intangible assets
The company determines a reliable estimate of the useful life of intangible assets based upon factors such as forecasts of expected future results and cash flows, and any legal, regulatory or contractual provisions that can limit useful life. At each subsequent reporting date, the directors consider whether there are any factors such as technological advancements or changes in market conditions that indicate a need to reconsider the useful life of intangible assets.
FIRST NATURAL BRANDS LTD
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 30 APRIL 2023
- 21 -
3
Revenue
2023
2022
£
£
Revenue analysed by class of business
Bottling, marketing and sales of essential oils and
personal care products
8,075,331
9,768,967
2023
2022
£
£
Revenue analysed by geographical market
United Kingdom
6,729,509
7,826,060
Rest of the world
1,345,822
1,942,907
8,075,331
9,768,967
4
Exceptional items
2023
2022
£
£
Income
Write off of intercompany loan
600,000
-
Expenditure
Exceptional costs
-
108,930
Exceptional costs in 2022 relate to the closure of the Market Rasen site in Lincolshire.
5
Operating loss
2023
2022
Operating loss for the year is stated after charging/(crediting):
£
£
Exchange (gains)/losses
(33,661)
2,002
Research and development costs
(1,610)
(1,918)
Depreciation of owned property, plant and equipment
134,587
108,314
Depreciation of property, plant and equipment held under finance leases
22,566
30,861
Loss on disposal of property, plant and equipment
5,862
17,248
Amortisation of intangible assets
318,899
324,041
Share-based payments
-
(9,552)
Operating lease charges
132,910
137,708
6
Auditor's remuneration
2023
2022
Fees payable to the company's auditor and associates:
£
£
For audit services
Audit of the financial statements of the company
25,000
24,000
The company has taken of the advantage of the exemption not to disclose amounts paid for non-audit services as these are disclosed in the group accounts of the parent company.
FIRST NATURAL BRANDS LTD
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 30 APRIL 2023
6
Auditor's remuneration
(Continued)
- 22 -
7
Employees
The average monthly number of persons (including directors) employed by the company during the year was:
2023
2022
Number
Number
Production and research
17
29
Management and administration
43
38
Total
60
67
Their aggregate remuneration comprised:
2023
2022
£
£
Wages and salaries
1,740,616
2,006,775
Social security costs
192,288
214,365
Pension costs
72,930
73,095
2,005,834
2,294,235
8
Directors' remuneration
2023
2022
£
£
Remuneration for qualifying services
250,127
241,668
Company pension contributions to defined contribution schemes
10,884
1,805
261,011
243,473
The number of directors for whom retirement benefits are accruing under defined contribution schemes amounted to 2 (2022 - 2).
Remuneration disclosed above include the following amounts paid to the highest paid director:
2023
2022
£
£
Remuneration for qualifying services
125,322
127,264
Company pension contributions to defined contribution schemes
6,259
6,430
FIRST NATURAL BRANDS LTD
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 30 APRIL 2023
- 23 -
9
Finance costs
2023
2022
£
£
Interest on bank overdrafts and loans
226,090
97,439
Other interest on financial liabilities - invoice discount charges
80,606
98,164
Interest on finance leases and hire purchase contracts
6,832
26,148
Other interest
27,172
65,258
340,700
287,009
10
Taxation
2023
2022
£
£
Current tax
Adjustments in respect of prior periods
(142,218)
Deferred tax
Origination and reversal of timing differences
(114,853)
(141,442)
Total tax credit
(114,853)
(283,660)
The actual credit for the year can be reconciled to the expected credit for the year based on the profit or loss and the standard rate of tax as follows:
2023
2022
£
£
Loss before taxation
(664,476)
(716,101)
Expected tax credit based on the standard rate of corporation tax in the UK of 19.00% (2022: 19.00%)
(126,250)
(136,059)
Tax effect of expenses that are not deductible in determining taxable profit
1,114
875
Tax effect of income not taxable in determining taxable profit
(2,022)
Unutilised tax losses carried forward
35,236
Deferred tax adjustments in respect of prior years
(44,853)
Fixed asset timing differences
89,900
5,279
Deferred tax not recognised
1,499
Adjustments to brought forward values
(2,660)
Adustments to tax charge in respect to prior periods
(142,218)
Remeasurement of deferred tax for changed in tax rates
(8,354)
Tax credit on future research and development claims
(70,000)
Taxation credit for the year
(114,853)
(283,660)
FIRST NATURAL BRANDS LTD
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 30 APRIL 2023
10
Taxation
(Continued)
- 24 -
Factors that may affect future tax charges
The U.K. Government announced in the 2021 budget that from 1 April 2023, the rate of corporation tax in the United Kingdom would increase from 19% to 25%. Companies with profits of £50,000 or less will continue to be taxed at 19%, which is the new small profits rate. Where taxable profits exceed £250,000 the higher tax rate of 25% will apply. Where taxable profits are between £50,000 and £250,000, a marginal tax rate will apply as profits increase. These tax bands will be reduce dependent upon the number of associated companies form a group for tax purposes.
11
Intangible fixed assets
Patents & licences
Development costs
Total
£
£
£
Cost
At 1 May 2022
230,480
1,188,190
1,418,670
Additions
243,606
198,750
442,356
At 30 April 2023
474,086
1,386,940
1,861,026
Amortisation and impairment
At 1 May 2022
165,597
747,789
913,386
Amortisation charged for the year
120,056
198,843
318,899
At 30 April 2023
285,653
946,632
1,232,285
Carrying amount
At 30 April 2023
188,433
440,308
628,741
At 30 April 2022
64,883
440,401
505,284
FIRST NATURAL BRANDS LTD
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 30 APRIL 2023
- 25 -
12
Property, plant and equipment
Leasehold improvements
Plant and equipment
Fixtures and fittings
Computers
Total
£
£
£
£
£
Cost
At 1 May 2022
148,919
590,745
35,624
275,228
1,050,516
Additions
220
566
5,013
10,254
16,053
Disposals
(1,725)
(56,835)
(4,336)
(7,518)
(70,414)
At 30 April 2023
147,414
534,476
36,301
277,964
996,155
Depreciation and impairment
At 1 May 2022
87,544
240,464
15,735
125,949
469,692
Depreciation charged in the year
33,601
64,473
5,512
53,567
157,153
Eliminated in respect of disposals
(1,581)
(54,080)
(3,981)
(8,822)
(68,464)
At 30 April 2023
119,564
250,857
17,266
170,694
558,381
Carrying amount
At 30 April 2023
27,850
283,619
19,035
107,270
437,774
At 30 April 2022
61,375
350,281
19,889
149,279
580,824
The net carrying value of tangible fixed assets includes the following in respect of assets held under finance leases or hire purchase contracts.
2023
2022
£
£
Plant and equipment
52,082
115,239
The depreciation charged to the financial statements in the year in respect of assets held under finance leases amounted to £22,566 (2022: £30,861).
13
Inventories
2023
2022
£
£
Raw materials and consumables
865,956
970,857
Finished goods and goods for resale
1,113,710
1,294,950
1,979,666
2,265,807
Inventories are stated after provisions for impairment of £Nil (2022: £Nil).
FIRST NATURAL BRANDS LTD
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 30 APRIL 2023
- 26 -
14
Trade and other receivables
2023
2022
Amounts falling due within one year:
£
£
Trade receivables
2,254,960
1,934,925
Corporation tax recoverable
123,095
Other receivables
66,494
Prepayments and accrued income
344,036
455,437
2,598,996
2,579,951
Deferred tax asset (note 19)
149,663
34,810
2,748,659
2,614,761
Trade debtors are subject to, and given as security, for an invoice discounting facility.
15
Current liabilities
2023
2022
Notes
£
£
Bank loans
17
140,996
30,491
Obligations under finance leases
18
13,877
39,702
Other borrowings
17
37,744
Trade payables
1,178,434
978,290
Amounts owed to group undertakings
28,382
529,487
Taxation and social security
157,724
115,165
Deferred income
20
26,864
11,770
Other payables
1,599,030
1,366,697
Accruals and deferred income
114,423
234,262
3,259,730
3,343,608
Amounts owed to group undertakings are unsecured, interest free and repayable on demand.
An unlimited company guarantee has been given by the company's parent, First Natural Limited.
In November 2021, the company entered into a refinance agreement with Santander UK plc. The company entered into 3 facilities with Santander:
incorporating a £1.75 million Growth Capital loan which is repayable in 4 years in November 2025;
and a 12 month £4 million confidential invoice discounting facility, which has been extended for another 12 months.
Interest on the Growth Capital Loan is 5% per annum above the U.K. base rate of which 5% per annum is payable in cash on a quarterly basis, and 5% accrues to the term of the Growth Capital Loan. Interest on the trade loan is 3% above the Bank of England’s base rate. Interest on the confidential invoice discounting facility is 2.15% above Santander's base rate.
The above loans are secured by way of fixed and floating charges over all assets of the company.
The obligations under finance leases are secured by way of a charge over the assets held under finance lease agreements.
FIRST NATURAL BRANDS LTD
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 30 APRIL 2023
- 27 -
16
Non-current liabilities
2023
2022
Notes
£
£
Bank loans and overdrafts
17
1,922,626
1,813,156
Obligations under finance leases
18
11,769
26,842
Other borrowings
17
155,682
109,164
Deferred income
20
15,094
2,090,077
1,964,256
See note 15 for details of the terms and conditions relating to bank loans and overdrafts.
17
Borrowings
2023
2022
£
£
Bank loans
2,063,622
1,843,647
Other loans
155,682
146,908
2,219,304
1,990,555
Payable within one year
140,996
68,235
Payable after one year
2,078,308
1,922,320
See note 15 for details of the terms and conditions relating to the above borrowings.
18
Finance lease obligations
2023
2022
Future minimum lease payments due under finance leases:
£
£
Within one year
16,337
42,162
In two to five years
14,232
29,429
30,569
71,591
Less: future finance charges
(4,923)
(5,047)
25,646
66,544
Finance lease payments represent rentals payable by the company for certain items of plant and machinery. Leases include purchase options at the end of the lease period, and no restrictions are placed on the use of the assets. The average lease term is less than 2 years. All leases are on a fixed repayment basis and no arrangements have been entered into for contingent rental payments.
FIRST NATURAL BRANDS LTD
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 30 APRIL 2023
- 28 -
19
Deferred taxation
The following are the major deferred tax liabilities and assets recognised by the company and movements thereon:
Assets
Assets
2023
2022
Balances:
£
£
Accelerated capital allowances
(102,610)
(103,159)
Tax losses and other deductions
244,341
129,488
Short term timing differences
7,932
8,481
149,663
34,810
2023
Movements in the year:
£
Asset at 1 May 2022
(34,810)
Credit to profit or loss
(114,853)
Asset at 30 April 2023
(149,663)
It is not expected that there will be any material reversal of the above balances in the year to 30 April 2024.
Deferred tax is not recognised in respect of tax losses of £185,452 as it is not probable that they will be recovered against the reversal of deferred tax liabilities or future taxable profits.
20
Deferred income
2023
2022
£
£
Other deferred income
26,864
26,864
Included in the financial statements as follows:
Current liabilities
26,864
11,770
Non-current liabilities
15,094
26,864
26,864
21
Retirement benefit schemes
2023
2022
Defined contribution schemes
£
£
Charge to profit or loss in respect of defined contribution schemes
72,930
73,095
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.
FIRST NATURAL BRANDS LTD
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 30 APRIL 2023
21
Retirement benefit schemes
(Continued)
- 29 -
The charge to profit or loss in respect of defined contribution schemes was £72,930 (2022 - £73,095).
Contributions totalling £Nil (2022: £9,634) were payable to the fund at the year end and are included within Other creditors.
22
Share capital
2023
2022
2023
2022
Ordinary share capital
Number
Number
£
£
Issued and fully paid
Ordinary A of £1 each
99,167
99,167
99,167
99,167
Ordinary B of £1 each
833
833
833
833
100,000
100,000
100,000
100,000
Ordinary A shares entitle the holder to one vote per share but do not entitle the holder to fixed income.
Ordinary B shares do not carry any voting rights and do not entitle the holder to fixed income.
23
Operating lease commitments
Lessee
Operating lease payments represent rentals payable on the premises from which the company operates.
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
92,500
98,980
Between two and five years
49,383
135,403
141,883
234,383
24
Events after the reporting date
There have been no significant events affecting the company since the year end.
25
Related party transactions
The company is a wholly owned subsidiary of First Natural Limited, and as such has taken advantage of the exemption permitted in Section 33.1A 'Related Party Disclosures' of FRS 102, not to provide disclosures of transactions entered into with other wholly owned members of the group.
FIRST NATURAL BRANDS LTD
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 30 APRIL 2023
- 30 -
26
Ultimate controlling party
The immediate and ultimate parent undertaking of the company is First Natural Limited, a company incorporated and registered in England and Wales. First Natural Limited is the largest and smallest group into which the financial statements of the company are consolidated. These financial statements may be obtained from Companies House at: https://find-and-update.company-information.service.gov.uk/ .
The directors of the company are considered to be the controlling parties of the company by virtue of their shareholdings in First Natural Limited.
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