The directors present the strategic report for the year ended 28 February 2024.
Principal activities
The Company is a group holding company and was dormant throughout the current and previous year. It is expected to remain dormant for the foreseeable future.
The principal activity of the company's wholly owed subsidiary, Fylde Fresh and Fabulous Limited, continued to be that of growing potatoes for further processing and distributing, and processing and distributing other vegetables. The company also receives income for generating energy that is input into the national grid.
The food manufacturing and chip wholesale divisions have seen changes in turnover of +245% and +28% respectively. The increase in turnover was driven by the growth of customer base and the addition of other vegetables into the portfolio of products offered. The impact of higher raw material prices following through into sales prices has also increased turnover. Anaerobic Digester sales were increased by 26% due to the benefit of higher electricity prices in the first part of the year.
The operating profit of the company has increased from £173,851 to £828,958.
The directors monitor gross profit margins as another key performance indicator and note a decrease from 45.61% to 30.78%. Significant raw material price inflation on Potatoes, with the weather resulting in one of the poorest harvests in recent memory, could not be fully passed through into sales prices.
Position at the end of the year
The company has a net current assets ratio of 1.10 compared to 1.19 in the prior year.
Key financial performance indicators
The group has three trading divisions and the directors consider that the key financial performance indicators are those that monitor the performance in respect of each of these divisions:
| 2024 | 2023 |
| £ | £ |
Revenue | 31,573,944 | 15,293,367 |
Gross profit | 9,718,886 | 6,975,260 |
Gross margin | 30.78% | 45.61% |
Operating profit | 828,958 | 173,851 |
Retained earnings | 3,360,400 | 3,110,607 |
Principal risks and uncertainties
The group faces a number of risks and uncertainties and the directors believe that the key business risks are as follows:
Economic lockdown
Closure of catering establishments and other out-of-home meal providers could reduce volume demand and also put the group’s customer’s liquidity under pressure potentially resulting in insolvency.
Mitigation: The group provides an essential and basic ingredient that is required even in the most extreme circumstances. The group’s customer base ranges between food manufacturers supplying the retail sector to food service distributors and fast-food takeway. This minimises the risk to the company from any one economic sector facing closures.
The group also closely manages its debtors to ensure that debts are kept low and within terms.
|
|
|
Insufficiently diverse customer portfolio
Over reliance on any one customer or sector would have a significant effect on the group’s turnover and margin if that business were to be lost.
Mitigation: The group maintains very close relationships with its largest customers and holds long-term contracts that help to secure volume. The group holds a niche position in the market given that it is a potato specialist that is also a direct grower with expert knowledge of its raw material. This unique position ensures that competitors struggle to offer the product quality and service to match.
The group has invested in new production capacity and added other vegetables to the product portfolio, so that it can offer a full basket of products to existing customers and also attract new customers. The impact of this can already be seen in the increase in turnover in the current financial year.
Government support in the renewable energy sector
A change in government policy could have an impact on the company’s anaerobic digester division through regulatory change removing access to green energy tariffs.
Mitigation: The group works closely with industry bodies such as NFU and ADBA to keep abreast of proposed regulatory changes and also to lobby where appropriate for the group’s best interests.
Competition risk
The industry in which the group operates is highly competitive. As a result the group has to price its products competitively in order to win tenders. However, developing new products, improving existing products, internal efficiencies and other measures have enabled the group to maintain its gross margin in recent years.
Health and Safety risk
The group is in a regulated industry where the maintenance of health and safety and environmental standards are absolutely crucial. The group recognises its obligations and the risk to its reputation of any incident affecting either its customers or employees. The directors are mindful of their responsibilities and comply with all relevant legislation.
On behalf of the board
The directors present their annual report and financial statements for the year ended 28 February 2024.
The results for the year are set out on page 8.
Ordinary dividends were paid amounting to £300,334. The directors do not recommend payment of a further dividend.
The directors who held office during the year and up to the date of signature of the financial statements were as follows:
The group's financial assets and liabilities consist of trade debtors and creditors, bank loans and overdrafts, inventories, and hire purchase agreements. Their existence exposes the company to a number of financial risks, which the group seeks to manage and limit the potential adverse effect. The main risks are:
Liquidity risk
The group operates within an agreed overdraft with the group bankers. The liquidity risk is considered low as the group has strong cash flow generated from operations.
Credit risk
To be commercial the group must allow its customers to trade with credit terms and hence the group is exposed to the associated risks. The group mitigates these risks by carrying out credit checks on new customers and a dedicated credit control department monitors the amounts outstanding from existing customers. Exposure to credit risk is considered low.
The directors anticipate that the business environment will remain competitive and market conditions will continue to vary with climatic conditions that affect the potato market. They believe that the group is in a good financial position and that the risks that have been identified are being well managed. With careful focus on raw material procurement, sales volume growth and competitor activity, the directors are confident in the group’s ability to maintain and build on this position, albeit with cautious growth expectations.
The auditor, Azets Audit Services, is deemed to be reappointed under section 487(2) of the Companies Act 2006.
The group has chosen in accordance with Companies Act 2006, s. 414C(11) to set out in the group'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:
Financial risk management objectives and policies
We have audited the financial statements of FFF Holdings Limited (the 'parent company') and its subsidiaries (the 'group') for the year ended 28 February 2024 which comprise the group statement of comprehensive income, the group statement of financial position, the company statement of financial position, the group statement of changes in equity, the company statement of changes in equity, the group statement of cash flows, the company 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).
Basis for opinion
We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and applicable law. Our responsibilities under those standards are further described in the Auditor's responsibilities for the audit of the financial statements section of our report. We are independent of the group and parent 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 group's and parent 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.
Other information
The other information comprises the information included in the annual report other than the financial statements and our auditor's report thereon. The 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.
In the light of the knowledge and understanding of the group and the parent company and their 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 by the parent company, or returns adequate for our audit have not been received from branches not visited by us; or
the parent company financial statements are not in agreement with the accounting records and returns; or
certain disclosures of directors' remuneration specified by law are not made; or
we have not received all the information and explanations we require for our audit.
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 parent 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 parent company or to cease operations, or have no realistic alternative but to do so.
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.
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.
Extent to which the audit was considered capable of detecting irregularities, including fraud
Irregularities, including fraud, are instances of non-compliance with laws and regulations. We design procedures in line with our responsibilities, outlined above and on the Financial Reporting Council’s website, to detect material misstatements in respect of irregularities, including fraud.
We obtain and update our understanding of the entity, its activities, its control environment, and likely future developments, including in relation to the legal and regulatory framework applicable and how the entity is complying with that framework. Based on this understanding, we 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. This includes consideration of the risk of acts by the entity that were contrary to applicable laws and regulations, including fraud.
In response to the risk of irregularities and non-compliance with laws and regulations, including fraud, we designed procedures which included:
Enquiry of management and those charged with governance around actual and potential litigation and claims as well as actual, suspected and alleged fraud;
Reviewing minutes of meetings of those charged with governance;
Assessing the extent of compliance with the laws and regulations considered to have a direct material effect on the financial statements or the operations of the entity through enquiry and inspection;
Reviewing financial statement disclosures and testing to supporting documentation to assess compliance with applicable laws and regulations;
Performing audit work over the risk of management bias and override of controls, including testing of journal entries and other adjustments for appropriateness, evaluating the business rationale of significant transactions outside the normal course of business and reviewing accounting estimates for indicators of potential bias.
Because of the inherent limitations of an audit, there is a risk that we will not detect all irregularities, including those leading to a material misstatement in the financial statements or non-compliance with regulation. This risk increases the more that compliance with a law or regulation is removed from the events and transactions reflected in the financial statements, as we will be less likely to become aware of instances of non-compliance. 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.
Use of our report
This report is made solely to the company’s members, as a body, in accordance with Chapter 3 of Part 16 of the Companies Act 2006. Our audit work has been undertaken so that we might state to the company’s members those matters we are required to state to them in an auditor's report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the company and the company’s members as a body, for our audit work, for this report, or for the opinions we have formed.
As permitted by s408 Companies Act 2006, the company has not presented its own income statement and related notes. The company’s profit for the year was £300,334 (2023 - £304,194 profit).
FFF Holdings Limited (“the company”) is a private limited company domiciled and incorporated in England and Wales. The registered office is Floor 1 Capital House, 8 Pittman Court, Pittman Way, Fulwood, Preston, Lancashire, United Kingdom, PR2 9ZG.
The group consists of FFF Holdings Limited and all of its subsidiaries.
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 certain financial instruments at fair value. The principal accounting policies adopted are set out below.
The consolidated group financial statements consist of the financial statements of the parent company FFF Holdings Limited together with all entities controlled by the parent company (its subsidiaries) and the group’s share of its interests in joint ventures and associates.
All financial statements are made up to 28 February 2024. Where necessary, adjustments are made to the financial statements of subsidiaries to bring the accounting policies used into line with those used by other members of the group.
All intra-group transactions, balances and unrealised gains on transactions between group companies are eliminated on consolidation. Unrealised losses are also eliminated unless the transaction provides evidence of an impairment of the asset transferred.
Subsidiaries are consolidated in the group’s financial statements from the date that control commences until the date that control ceases.
At the time of approving the financial statements, the directors have a reasonable expectation that the group 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.
Revenue represents amounts receivable for goods and services net of VAT and trade discounts. Sales are recognised at the point at which the company has fulfilled its contractual obligations and the risks and rewards attaching to the product have been transferred to the customer.
Revenue also includes income from energy generated by the group that is input into the national grid. This revenue is recognised when the group is entitled to the income based on the units produced per the meter readings.
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 income statement.
Equity investments are measured at fair value through profit or loss, except for those equity investments that are not publicly traded and whose fair value cannot otherwise be measured reliably, which are recognised at cost less impairment until a reliable measure of fair value becomes available.
In the parent company financial statements, investments in subsidiaries are initially measured at cost and subsequently measured at cost less any accumulated impairment losses.
A subsidiary is an entity controlled by the group. Control is the power to govern the financial and operating policies of the entity so as to obtain benefits from its activities.
At each reporting period end date, the group 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.
The carrying amount of the investments accounted for using the equity method is tested for impairment as a single asset. Any goodwill included in the carrying amount of the investment is not tested separately for impairment.
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.
The group only has financial assets (debtors, cash and bank balances) and financial liabilities (creditors and accruals) of a kind that qualify as basic financial instruments. Basic financial instruments are initially recognised at transaction value and subsequently measured at their settlement value.
Equity instruments issued by the group 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 group.
The tax expense represents the sum of the tax currently payable and deferred 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 group’s liability for current tax is calculated using tax rates that have been enacted or substantively enacted by the reporting end date.
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 if, and only if, there is 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.
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.
Payments to defined contribution retirement benefit schemes are charged as an expense as they fall due.
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 on a straight line basis.
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 leased asset are consumed.
In the application of the group’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.
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.
Tangible fixed assets are depreciated using the straight-line or reducing balance method based on the estimated useful life, taking into account any residual value. The asset’s residual value and useful life are based on company best estimates and are reviewed, and adjusted if required, at each balance sheet date.
The average monthly number of persons (including directors) employed by the group and company during the year was:
Their aggregate remuneration comprised:
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:
The net carrying value of tangible fixed assets includes the following in respect of assets held under finance leases or hire purchase contracts.
Details of the company's subsidiaries at 28 February 2024 are as follows:
Details of joint ventures at 28 February 2024 are as follows:
Hire purchase creditors of £253,949 (2023: £302,777) are secured against the assets to which the agreement relates.
Hire purchase creditors of £509,751 (2023: £473,543) are secured against the assets to which the agreement relates.
The bank borrowings with Oxbury are repayable over 84 instalments of £3,869 commencing September 2023.
The loans are secured by:
Farm Generation Limited - Debenture and legal mortgage
Triple F Chips Distribution Limited - Debenture
FFF Holdings Limited - Debenture
Fylde Fresh and Fabulous Limited - Debenture
Cross guarantee between Farm Generation Limited, Fylde Fresh and Fabulous Limited, Triple F Chips Distribution Limited, FFF Holdings Limited, and TGS Produce Limited.
Finance lease payments represent rentals payable by the group for certain items of plant and machinery and motor vehicles. The group has options to purchase the equipment for a nominal amount at the conclusion of the lease arrangements. The average lease term is 3 to 5 years.
The finance leases are secured by the lessors' title to the leased assets which have a carrying value of £1,048,944 (2023: £1,077,130).
The directors consider that the carrying amount of the obligations under finance leases approximate to their fair value.
The following are the major deferred tax liabilities and assets recognised by the group and company, and movements thereon:
A defined contribution pension scheme is operated for all qualifying employees. The assets of the scheme are held separately from those of the group in an independently administered fund.
The group is party to an agreement for loans provided by Oxbury to Farm Generation Limited. The group has provided Oxbury with a debenture.
The total indebtedness of Farm Generation Limited to Oxbury at 29 February 2024 was £2,686,476 (2023: £Nil).
At the reporting end date the group had outstanding commitments for future minimum lease payments under non-cancellable operating leases, which fall due as follows:
| 2024 £
| 2023 £ |
Trade receivable due from related companies | 16,581 | 52,970 |
Trade payable due to related companies | 536,747 | 55,002 |
Good and services from related companies | 5,958,735 | 2,027,482 |
Leases from related companies | 408,429 | 375,837 |
Sales to related companies | 2,201,934 | 891,123 |
Loans from directors | 24,608 | 25,059 |
Interest from loans to related companies | 14,961 | - |
Loans to related companies | 4,347,450 | 112,806 |
Services from a director | 164,311 | 169,000 |
Key management personnel remuneration | 289,502 | 238,788 |
No bad or doubtful debts were recognised in respect of amounts due from related parties in the current or previous period.
Loans totalling £3,972,450 to related companies are unsecured, interest free and repayable on demand.
Loans totalling £375,000 to related companeis are unsecured, repayable on demand and interest is charged at 8%.