Company registration number 02559934 (England and Wales)
S & A SOFT FRUITS LIMITED
ANNUAL REPORT AND FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
S & A SOFT FRUITS LIMITED
COMPANY INFORMATION
Directors
Mr Stanley Davies
Mr Frank Green
Mr Trevor Gregory
Mr John Judge
Mr J Kerr
Mr Daniel Martin
Secretary
Mr J Kerr
Company number
02559934
Registered office
Brook Farm
Marden
Hereford
Herefordshire
HR1 3ET
Auditor
UHY Hacker Young
Bradbury House
Mission Court
Newport
Gwent
United Kingdom
NP20 2DW
Bankers
Lloyds Bank PLC
1 High Town
Hereford
HR1 1AE
S & A SOFT FRUITS LIMITED
CONTENTS
Page
Strategic report
1 - 2
Directors' report
3 - 4
Independent auditor's report
5 - 7
Profit and loss account
8
Statement of comprehensive income
9
Balance sheet
10
Statement of changes in equity
11
Notes to the financial statements
12 - 22
S & A SOFT FRUITS LIMITED
STRATEGIC REPORT
FOR THE YEAR ENDED 31 DECEMBER 2023
- 1 -
The directors present the strategic report for the year ended 31 December 2023.
Review of business
The company produces strawberries and asparagus for the retail market in the UK. The company’s production facilities are located in Herefordshire. The company markets all its crops through S & A Produce (UK) Limited, a group company which acts as agent for Specialty Produce Limited, a producer organisation.
The results for the company show a profit before tax of £1,658,107 (2022: £742,669) for the year with sales of £27,853,532 (2022: £26,381,694). The gross profit margin has increased from £290,161 to £2,128,602, this is the group's key measure of performance. The result is supported by the receipt of R&D tax credits relating to expenditure incurred in previous years totalling £736,539 (2022: £1,759,968), reflecting the historic and continued investments made in research and development. At the year-end the company showed net assets of £11,780,545 (2022: £10,655,329).
Given the straightforward nature of the business, the company’s directors are of the opinion that analysis using any further key performance indicators is not necessary for an understanding of the development, performance or position of the business.
Commercial risks
The management of the business and execution of the company’s strategy are subject to a number of risks.
As with any business engaged in growing fresh produce, growing conditions have a significant influence over the yield and quality of the crop. This is particularly the case with growing soft fruit, and the use of polytunnels to protect the crop from the elements is a critical component in protecting the business from increasingly extreme swings in weather conditions.
The availability of seasonal labour to pick the crop and undertake other key tasks is of critical importance and any shortfall in availability is a risk to the business. The group has developed its skills and expertise in the recruitment of seasonal labour to minimise this risk and has also developed growing methods which has reduced the number of seasonal seasonal workers required in its business.
Furthermore, the company markets all its crops through S & A Produce (UK) Limited which in turn sells the produce on to a small number of large customers. Reliance on small customer base is potentially a risk and the group seeks to mitigate this risk by maintaining strong relationships with its key customers and providing high service levels whilst seeking to expand its customer base.
Financial risks
As a significant proportion of the company's purchases are transacted in Euros it is therefore exposed to translational currency risk. To the extent that the directors are of the opinion that the level of risk on specific foreign currency transactions is higher than acceptable, foreign currency hedging instruments are taken out.
The company continues to be dependent on the availability of liquid resources, repayable on demand, from other group companies. The directors are of the opinion that the financial instruments available within the group are structured in such a way that the level of liquidity risk is acceptable.
The company's produce is marketed through S & A Produce (UK) Limited acting as agent for Speciality Produce Limited. As a consequence the company's exposure to credit risk is primarily balances due from its fellow group company.
S & A SOFT FRUITS LIMITED
STRATEGIC REPORT (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
- 2 -
Future developments
The company's strategy is geared towards ensuring availability to consumers of UK-produced soft fruit and asparagus at affordable prices.
Mr J Kerr
Director
18 September 2024
S & A SOFT FRUITS LIMITED
DIRECTORS' REPORT
FOR THE YEAR ENDED 31 DECEMBER 2023
- 3 -
The directors present their annual report and financial statements for the year ended 31 December 2023.
Directors
The directors who held office during the year and up to the date of signature of the financial statements were as follows:
Mr Stanley Davies
Mr Frank Green
Mr Trevor Gregory
Mr John Judge
Mr J Kerr
Mr Daniel Martin
Results and dividends
The results for the year are set out on page 8. A review of business is set out in the strategic report on pages 1-2.
No ordinary dividends were paid. The directors do not recommend payment of a final dividend.
Disabled persons
Applications for employment by disabled persons are always fully considered, bearing in mind the aptitudes of the applicant concerned. In the event of members of staff becoming disabled, every effort is made to ensure that their employment within the company continues and that the appropriate training is arranged. It is the policy of the company that the training, career development and promotion of disabled persons should, as far as possible, be identical to that of other employees.
Employee involvement
The company encourages the involvement of employees in its management through regular departmental meetings.
Auditor
UHY Hacker Young have expressed their willingness to continue in office as auditor and appropriate arrangements have been put in place for them to be deemed reappointed as auditor in the absence of an Annual General Meeting.
Statement of directors' responsibilities
The directors are responsible for preparing the annual report and the financial statements in accordance with applicable law and regulations.
Company law requires the directors to prepare financial statements for each financial year. Under that law the directors have elected to prepare the financial statements in accordance with United Kingdom Generally Accepted Accounting Practice (United Kingdom Accounting Standards and applicable law). Under company law the directors must not approve the financial statements unless they are satisfied that they give a true and fair view of the state of affairs of the company and of the profit or loss of the company for that period. In preparing these financial statements, the directors are required to:
select suitable accounting policies and then apply them consistently;
make judgements and accounting estimates that are reasonable and prudent;
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.
S & A SOFT FRUITS LIMITED
DIRECTORS' REPORT (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
- 4 -
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.
Going concern
The directors consider that the company is well positioned with a number of important strengths which make it resilient in a period of economic downturn. The company and its fellow subsidiaries maintain strong trading relationships with its key customers and have continued to invest in efficient growing and packing facilities. As a consequence, the company is capable of withstanding the margin pressure prevailing in the current market conditions.
The company made an operating profit of £1,664,028 (2022: £744,404). The company is part of the S & A Group which at the year-end had cash balances of £10,297,340 (2022: £8,461,788).
The company’s core financing, and that of its fellow subsidiaries, is provided by medium to long-term bank loans supplemented by short-term loan and overdraft facilities for the group as a whole. The forecasts and projections for the group of companies show that the group should be able to operate within the bank facilities which it currently has available.
After making enquiries, the directors have a reasonable expectation that the company has adequate resources to continue in operational existence for the foreseeable future. Accordingly, the directors continue to adopt the going concern basis in preparing the directors’ report and accounts.
On behalf of the board
Mr J Kerr
Director
18 September 2024
S & A SOFT FRUITS LIMITED
INDEPENDENT AUDITOR'S REPORT
TO THE MEMBERS OF S & A SOFT FRUITS LIMITED
- 5 -
Opinion
We have audited the financial statements of S & A Soft Fruits Limited (the 'company') for the year ended 31 December 2023 which comprise the profit and loss account, the statement of comprehensive income, the balance sheet, 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 31 December 2023 and of its profit for the year then ended;
have been properly prepared in accordance with United Kingdom Generally Accepted Accounting Practice; and
have been prepared in accordance with the requirements of the Companies Act 2006.
We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and applicable law. Our responsibilities under those standards are further described in the Auditor's responsibilities for the audit of the financial statements section of our report. We are independent of the company in accordance with the ethical requirements that are relevant to our audit of the financial statements in the UK, including the FRC’s Ethical Standard, and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
Conclusions relating to going concern
In auditing the financial statements, we have concluded that the directors' use of the going concern basis of accounting in the preparation of the financial statements is appropriate.
Based on the work we have performed, we have not identified any material uncertainties relating to events or conditions that, individually or collectively, may cast significant doubt on the company's ability to continue as a going concern for a period of at least twelve months from when the financial statements are authorised for issue.
Our responsibilities and the responsibilities of the directors with respect to going concern are described in the relevant sections of this report.
The other information comprises the information included in the annual report other than the financial statements and our auditor’s report thereon. The directors are responsible for the other information contained within the financial statement. 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 there is a material misstatement in the financial statements or a material misstatement of the other information. 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.
S & A SOFT FRUITS LIMITED
INDEPENDENT AUDITOR'S REPORT (CONTINUED)
TO THE MEMBERS OF S & A SOFT FRUITS LIMITED
- 6 -
Matters on which we are required to report by exception
In the light of the knowledge and understanding of the company and its environment obtained in the course of the audit, we have not identified material misstatements in the strategic report or the directors' report.
We have nothing to report in respect of the following matters in relation to which the Companies Act 2006 requires us to report to you if, in our opinion:
adequate accounting records have not been kept, or returns adequate for our audit have not been received from branches not visited by us; or
the financial statements are not in agreement with the accounting records and returns; or
certain disclosures of remuneration specified by law are not made; or
we have not received all the information and explanations we require for our audit.
Responsibilities of directors
As explained more fully in the directors' responsibilities statement, the directors are responsible for the preparation of the financial statements and for being satisfied that they give a true and fair view, and for such internal control as the directors determine is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error. In preparing the financial statements, the directors are responsible for assessing the company's ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the directors either intend to liquidate the company or to cease operations, or have no realistic alternative but to do so.
Auditor's responsibilities for the audit of the financial statements
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor's report that includes our opinion. Reasonable assurance is a high level of assurance but is not a guarantee that an audit conducted in accordance with ISAs (UK) will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements.
Irregularities, including fraud, are instances of non-compliance with laws and regulations. We design procedures in line with our responsibilities, outlined above, to detect material misstatements in respect of irregularities, including fraud. The extent to which our procedures are capable of detecting irregularities, including fraud, is detailed below.
Our approach to identifying and assessing the risks of material misstatements in respect of irregularities, including fraud and non-compliance with laws and regulations, was as follows:
the engagement partner ensured that the engagement team collectively had the appropriate competence, capabilities and skills to identify or recognise non-compliance with applicable laws and regulations;
we identified the laws and regulations applicable to the company through discussions with directors and other management, and from our commercial knowledge and experience of the relevant sector;
we focused on specific laws and regulations which we considered may have a direct material effect on the financial statements or the operations of the company, including the Companies Act 2006;
we assessed the extent of compliance with laws and regulations identified above through making enquiries of management and inspecting legal correspondence; and
identified laws and regulations were communicated within the audit team regularly and the team remained alert to instances of non-compliance throughout the audit.
We assessed the susceptibility of the company's financial statements to material misstatements, including obtaining an understanding of how fraud might occur, by:
making enquiries of management as to where they considered there was susceptibility to fraud, their knowledge of actual, suspected and alleged fraud; and
considering the internal controls in place to mitigate risks of fraud and non-compliance with laws and regulations.
S & A SOFT FRUITS LIMITED
INDEPENDENT AUDITOR'S REPORT (CONTINUED)
TO THE MEMBERS OF S & A SOFT FRUITS LIMITED
- 7 -
To address risk of fraud through management bias and override of controls, we:
performed analytical procedures to identify any unusual or unexpected relationships;
tested journal entries to identify unusual transactions;
assessed whether judgements and assumptions made in determining the accounting estimates were indicative of potential bias; and
investigated the rationale behind significant or unusual transactions.
There are inherent limitations in our audit procedures described above. The more removed that laws and regulations are from the financial statements, the less likely it is that we would become aware of non-compliance. Auditing standards also limit the audit procedures required to identify non-compliance with laws and regulations to enquiry of the directors and other management and the inspection of regulatory and legal correspondence, if any.
Material misstatements that arise due to fraud can be harder to detect than those that arise from error as they may involve deliberate concealment or collusion.
A further description of our responsibilities 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.
Mr John Griffiths (Senior Statutory Auditor)
For and on behalf of UHY Hacker Young
18 September 2024
Chartered Accountants
Statutory Auditor
Newport
Gwent
United Kingdom
S & A SOFT FRUITS LIMITED
PROFIT AND LOSS ACCOUNT
FOR THE YEAR ENDED 31 DECEMBER 2023
- 8 -
2023
2022
Notes
£
£
Turnover
3
27,853,532
26,381,694
Cost of sales
(25,724,930)
(26,091,533)
Gross profit
2,128,602
290,161
Administrative expenses
(1,995,800)
(1,788,801)
Other operating income
4
1,531,226
2,243,044
Operating profit
5
1,664,028
744,404
Interest payable and similar expenses
8
(5,921)
(1,735)
Profit before taxation
1,658,107
742,669
Tax on profit
9
(532,891)
404,174
Profit for the financial year
1,125,216
1,146,843
The profit and loss account has been prepared on the basis that all operations are continuing operations.
S & A SOFT FRUITS LIMITED
STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEAR ENDED 31 DECEMBER 2023
- 9 -
2023
2022
£
£
Profit for the year
1,125,216
1,146,843
Other comprehensive income
-
-
Total comprehensive income for the year
1,125,216
1,146,843
S & A SOFT FRUITS LIMITED
BALANCE SHEET
AS AT
31 DECEMBER 2023
31 December 2023
- 10 -
2023
2022
Notes
£
£
£
£
Fixed assets
Tangible assets
10
4,286,227
4,725,395
Current assets
Stocks
11
2,699,724
2,568,199
Debtors
12
6,743,935
4,911,339
Cash at bank and in hand
10,000
10,000
9,453,659
7,489,538
Creditors: amounts falling due within one year
13
(1,882,622)
(1,480,605)
Net current assets
7,571,037
6,008,933
Total assets less current liabilities
11,857,264
10,734,328
Creditors: amounts falling due after more than one year
14
(76,719)
(78,999)
Net assets
11,780,545
10,655,329
Capital and reserves
Called up share capital
18
50,000
50,000
Share premium account
19
25,651
25,651
Profit and loss reserves
19
11,704,894
10,579,678
Total equity
11,780,545
10,655,329
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 18 September 2024 and are signed on its behalf by:
Mr J Kerr
Director
Company registration number 02559934 (England and Wales)
S & A SOFT FRUITS LIMITED
STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 DECEMBER 2023
- 11 -
Share capital
Share premium account
Profit and loss reserves
Total
£
£
£
£
Balance at 1 January 2022
50,000
25,651
9,432,835
9,508,486
Year ended 31 December 2022:
Profit and total comprehensive income
-
-
1,146,843
1,146,843
Balance at 31 December 2022
50,000
25,651
10,579,678
10,655,329
Year ended 31 December 2023:
Profit and total comprehensive income
-
-
1,125,216
1,125,216
Balance at 31 December 2023
50,000
25,651
11,704,894
11,780,545
S & A SOFT FRUITS LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
- 12 -
1
Accounting policies
Company information
S & A Soft Fruits Limited is a private company limited by shares incorporated in England and Wales. The registered office is Brook Farm, Marden, Hereford, Herefordshire, HR1 3ET.
1.1
Accounting convention
These financial statements have been prepared in accordance with FRS 102 “The Financial Reporting Standard applicable in the UK and Republic of Ireland” (“FRS 102”) and the requirements of the Companies Act 2006.
The financial statements are prepared in sterling, which is the functional currency of the company. Monetary amounts in these financial statements are rounded to the nearest £.
The financial statements have been prepared under the historical cost convention. The principal accounting policies adopted are set out below.
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 4 ‘Statement of Financial Position’: Reconciliation of the opening and closing number of shares;
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’: Carrying amounts, interest income/expense and net gains/losses for each category of financial instrument; 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 33 ‘Related Party Disclosures’: Compensation for key management personnel.
The financial statements of the company are consolidated in the financial statements of S & A Group Holdings Limited. These consolidated financial statements are available from its registered office, Bank Farm, Marden, Herefordshire, HR1 3ET.
1.2
Going concern
The directors consider that the company is well positioned with a number of important strengths which make it resilient in a period of economic downturn. The company and its fellow subsidiaries maintain strong trading relationships with its key customers and have continued to invest in efficient growing and packing facilities. As a consequence, the company is capable of withstanding the margin pressure prevailing in the current market conditions.true
The company made an operating profit of £1,664,028 (2022: £744,404). The company is part of the S & A Group which at the year-end had cash balances of £10,297,340 (2022: £8,461,788).
The company’s core financing, and that of its fellow subsidiaries, is provided by medium to long-term bank loans supplemented by short-term loan and overdraft facilities for the group as a whole. The forecasts and projections for the group of companies show that the group should be able to operate within the bank facilities which it currently has available.
After making enquiries, the directors have a reasonable expectation that the company has adequate resources to continue in operational existence for the foreseeable future. Accordingly, the directors continue to adopt the going concern basis in preparing the directors’ report and accounts.
The business has not been affected materially by the impact of Brexit. Measures taken in 2022 to secure the supply chain for goods and labour have minimised the impact of the transition in 2023.
S & A SOFT FRUITS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
1
Accounting policies
(Continued)
- 13 -
1.3
Turnover
Turnover is recognised at the fair value of the consideration received or receivable for goods 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 discounts and rebates.
Revenue from the sale of goods is recognised when the significant risks and rewards of ownership of the goods have passed to the buyer (usually when goods are physically delivered), the amount of revenue can be measured reliably, it is probable that the economic benefits associated with the transaction will flow to the entity and the costs incurred or to be incurred in respect of the transaction can be measured reliably.
1.4
Tangible fixed assets
Tangible fixed assets are initially measured at cost and subsequently measured at cost or valuation, net of depreciation and any impairment losses.
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
2.5% to 10% straight-line
Plant and equipment
2.5% to 20% straight-line
Motor vehicles
25% straight-line
Assets in the course of construction are not depreciated.
The gain or loss arising on the disposal of an asset is determined as the difference between the sale proceeds and the carrying value of the asset, and is credited or charged to profit or loss.
1.5
Stocks
Growing crops and consumables are valued at the lower of cost and net realiseable value.
Total costs of growing crops are calculated as the amount payable to suppliers for plants, fertilisers and sprays together with an element of materials and overheads. These costs are consumed by the company over the estimated cropping life of the plants acquired.
Net realisable value is based on estimated selling price less any further costs expected to be incurred to completion or disposal. Provision is made for obsolete, slow moving or damaged stock where appropriate.
1.6
Financial instruments
The company has elected to apply the provisions of Section 11 ‘Basic Financial Instruments’ and Section 12 ‘Other Financial Instruments Issues’ of FRS 102 to all of its financial instruments.
Financial instruments are recognised in the company's balance sheet when the company becomes party to the contractual provisions of the instrument.
Financial assets and liabilities are offset, with the net amounts presented in the financial statements, when there is a legally enforceable right to set off the recognised amounts and there is an intention to settle on a net basis or to realise the asset and settle the liability simultaneously.
Debtors and creditors with no stated interest rate and receivable or payable within one year are recorded at transaction price. Any losses arising from impairment are recognised in the profit and loss account in other administrative expenses.
S & A SOFT FRUITS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
1
Accounting policies
(Continued)
- 14 -
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.
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.
1.7
Taxation
The tax expense represents the sum of the tax currently payable and deferred tax.
Current tax
The tax currently payable is based on taxable profit for the year. Taxable profit differs from net profit as reported in the profit and loss account because it excludes items of income or expense that are taxable or deductible in other years and it further excludes items that are never taxable or deductible. The company’s liability for current tax is calculated using tax rates that have been enacted or substantively enacted by the reporting end date.
S & A SOFT FRUITS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
1
Accounting policies
(Continued)
- 15 -
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.
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.
R&D tax credits
R&D tax credits are recognised when there is a high probability that they will be received, on the basis of prudence as claims are complex and subject to HMRC approval which can take considerable time to be agreed.
1.8
Retirement benefits
Payments to defined contribution retirement benefit schemes are charged as an expense as they fall due.
1.9
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 balance sheet 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.
1.10
Foreign exchange
Transactions in currencies other than pounds sterling are recorded at the rates of exchange prevailing at the dates of the transactions. At each reporting end date, monetary assets and liabilities that are denominated in foreign currencies are retranslated at the rates prevailing on the reporting end date. Gains and losses arising on translation in the period are included in profit or loss.
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.
At the balance sheet date, the directors do not consider that there were any critical judgements which had a significant effect on the amounts recognised in the financial statements.
S & A SOFT FRUITS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
2
Judgements and key sources of estimation uncertainty
(Continued)
- 16 -
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.
Valuation of growing crops
The cost of growing crops including plants, fertiliser, labour absorption, coir and poly-tunnel plastic are spread on a systematic basis over the specific harvest cycle; this is based on the board's estimation based on experience gained over many harvests.
3
Turnover and other revenue
The total turnover of the company for the financial year has been derived from its principal activity wholly undertaken in the United Kingdom.
4
Other operating income
2023
2022
£
£
R&D tax credits
736,539
1,759,968
Other
794,687
483,076
1,531,226
2,243,044
R&D tax credits have been recognised in the current year which relate to claims for expenditure incurred in 2022 (2022: 2020 & 2021).
5
Operating profit
2023
2022
Operating profit for the year is stated after charging:
£
£
Fees payable to the company's auditor for the audit of the company's financial statements
14,000
12,750
Depreciation of owned tangible fixed assets
885,096
891,151
Depreciation of tangible fixed assets held under finance leases
123,625
66,063
Operating lease charges
230,000
338,899
6
Employees
The average monthly number of persons (including directors) employed by the company during the year was:
2023
2022
Number
Number
Production
429
403
S & A SOFT FRUITS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
6
Employees
(Continued)
- 17 -
Their aggregate remuneration comprised:
2023
2022
£
£
Wages and salaries
9,347,744
9,025,500
Social security costs
706,566
709,329
Pension costs
45,318
55,148
10,099,628
9,789,977
7
Directors' remuneration
The directors are remunerated by S & A Produce (UK) Limited, another group company, for their services to the group as a whole. Details are set out in the accounts for that company. It is not practicable to split the remuneration of the directors for their services to this company.
8
Interest payable and similar expenses
2023
2022
£
£
Interest on bank overdrafts and loans
56
-
Interest on finance leases and hire purchase contracts
5,865
1,735
5,921
1,735
9
Taxation
2023
2022
£
£
Current tax
UK corporation tax on profits for the current period
368,835
Adjustments in respect of prior periods
583,490
(368,835)
Total current tax
583,490
Deferred tax
Origination and reversal of timing differences
125,888
(384,975)
Adjustment in respect of prior periods
(176,487)
(19,199)
Total deferred tax
(50,599)
(404,174)
Total tax charge/(credit)
532,891
(404,174)
S & A SOFT FRUITS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
9
Taxation
(Continued)
- 18 -
The actual charge/(credit) for the year can be reconciled to the expected charge for the year based on the profit or loss and the standard rate of tax as follows:
2023
2022
£
£
Profit before taxation
1,658,107
742,669
Expected tax charge based on the standard rate of corporation tax in the UK of 23.52% (2022: 19.00%)
389,995
141,107
Tax effect of expenses that are not deductible in determining taxable profit
32,458
1,245
Adjustments in respect of prior years
562,703
Effect of change in corporation tax rate
(39,076)
(92,394)
Group relief
32,620
Depreciation on assets not qualifying for tax allowances
15,014
12,128
Research and development tax credit
(156,820)
(368,563)
Other permanent differences
(838)
(33,243)
Deferred tax adjustments in respect of prior years
(19,199)
Patent Box claim
(303,165)
(45,255)
Taxation charge/(credit) for the year
532,891
(404,174)
In addition to the tax arising as noted above, the company received R&D tax credit income in the current and prior year, refer to 4.
S & A SOFT FRUITS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
- 19 -
10
Tangible fixed assets
Leasehold improvements
Assets under construction
Plant and equipment
Motor vehicles
Total
£
£
£
£
£
Cost
At 1 January 2023
1,113,113
18,518,412
314,673
19,946,198
Additions
323,572
216,986
28,995
569,553
Disposals
(99,749)
(99,749)
At 31 December 2023
1,113,113
323,572
18,735,398
243,919
20,416,002
Depreciation and impairment
At 1 January 2023
729,823
14,184,181
306,799
15,220,803
Depreciation charged in the year
26,328
971,207
11,186
1,008,721
Eliminated in respect of disposals
(99,749)
(99,749)
At 31 December 2023
756,151
15,155,388
218,236
16,129,775
Carrying amount
At 31 December 2023
356,962
323,572
3,580,010
25,683
4,286,227
At 31 December 2022
383,290
4,334,231
7,874
4,725,395
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
586,465
544,906
The liabilities for some of the assets noted above on hire purchase contracts are held within other group companies.
11
Stocks
2023
2022
£
£
Raw materials and consumables
347,044
225,940
Growing crops
2,352,680
2,342,259
2,699,724
2,568,199
S & A SOFT FRUITS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
- 20 -
12
Debtors
2023
2022
Amounts falling due within one year:
£
£
Trade debtors
689,654
Corporation tax recoverable
668,550
1,512,888
Amounts owed by group undertakings
1,947,106
511,721
Other debtors
3,310,490
2,809,194
6,615,800
4,833,803
Deferred tax asset (note 16)
128,135
77,536
6,743,935
4,911,339
13
Creditors: amounts falling due within one year
2023
2022
Notes
£
£
Obligations under finance leases
15
100,524
62,000
Trade creditors
648,185
792,803
Accruals and deferred income
1,133,913
625,802
1,882,622
1,480,605
14
Creditors: amounts falling due after more than one year
2023
2022
Notes
£
£
Obligations under finance leases
15
76,719
78,999
15
Finance lease obligations
2023
2022
Future minimum lease payments due under finance leases:
£
£
Within one year
100,524
62,000
In two to five years
76,719
78,999
177,243
140,999
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. All leases are on a fixed repayment basis and no arrangements have been entered into for contingent rental payments.
The company's obligations under hire purchase contracts are secured by the lessor's rights on assets held in tangible fixed assets.
S & A SOFT FRUITS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
- 21 -
16
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
(448,111)
(477,720)
Tax losses
419,426
550,583
Short-term timing differences
156,820
4,673
128,135
77,536
2023
Movements in the year:
£
Asset at 1 January 2023
(77,536)
Credit to profit or loss
(50,599)
Asset at 31 December 2023
(128,135)
The deferred tax asset set out above is expected to reverse in future years and relates predominantly to carried forward taxable losses, fixed asset timing differences and other short term timing differences.
17
Retirement benefit schemes
2023
2022
Defined contribution schemes
£
£
Charge to profit or loss in respect of defined contribution schemes
45,318
55,148
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.
At 31 December 2023 there were amounts due of £nil (2022: £nil), in respect of the current reporting period, to be paid over to the scheme.
18
Share capital
2023
2022
2023
2022
Ordinary share capital
Number
Number
£
£
Issued and fully paid
Ordinary shares of £1 each
50,000
50,000
50,000
50,000
The company has one class of ordinary shares which carry no right to fixed income.
S & A SOFT FRUITS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
- 22 -
19
Reserves
The share premium reserve contains the premium arising on issue of equity shares, net of issue expenses.
The profit & loss reserve represents cumulative profits or losses net of dividends paid and other adjustments.
20
Financial commitments, guarantees and contingent liabilities
The company is part of an omnibus agreement with certain other parties under common control. The net indebtedness of these other parties at the 31 December 2023 was £4,554,435 (2022: £9,513,845). The net indebtedness of the group at 31 December 2023 was £4,544,435 (2022: £9,503,845). The company has provided as security against this indebtedness an unlimited all-monies guarantee by way of a fixed and floating charge over all of its assets.
21
Operating lease commitments
Lessee
At the reporting end date the company had outstanding commitments for future minimum lease payments under non-cancellable operating leases, which fall due as follows:
2023
2022
£
£
Within one year
230,000
250,472
Between two and five years
920,000
920,000
In over five years
230,000
460,000
1,380,000
1,630,472
22
Related party transactions
The company has taken advantage of the exemption in FRS 102 Section 33 from the requirement to disclose transactions with group companies on the grounds that consolidated financial statements are prepared by the ultimate controlling party.
During the year the company purchased goods from entities owned by a director at a cost of £375,033(2022: £427,333). Amounts outstanding and included within trade creditors at the year end were £nil (2022: £217,111).
23
Ultimate controlling party
As at 31 December 2023 the company was controlled by F M Green by virtue of his shareholding in the parent undertaking S & A Group Holdings Limited. Copies of the group financial statements for the parent undertaking, which is both the smallest and largest group into which the results of the company are consolidated, can be obtained form the registered office at Brook farm, Marden, Herefordshire, HR1 3ET.
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