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Registered number: SC116286










INNOVATE FOODS LIMITED
DIRECTORS' REPORT AND FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023

 
INNOVATE FOODS LIMITED
 

COMPANY INFORMATION


Directors
Mr A M Dumbreck 
Mr M Bross (appointed 30 June 2024)
Mr F Dervieux 
Mr A Bach (appointed 8 May 2023, resigned 30 June 2024)
Mr P Skelding (appointed 8 May 2023)
Mr A Juhnke (appointed 1 July 2024)
Mr H Lompe (appointed 1 July 2024)
Mr M Thomas (appointed 1 July 2024)




Registered number
SC116286



Registered office
Barncraig
Boreland Road

Kirkcaldy

Fife

KY1 2YG




Independent auditors
Sumer Auditco Limited
Chartered Accountants

Pentland House

Saltire Centre

Glenrothes

KY6 2AH




Accountants
EQ Accountants Limited
Pentland House

Saltire Centre

Glenrothes

Fife

KY6 2AH





 
INNOVATE FOODS LIMITED
 

CONTENTS



Page
Strategic report
1 - 2
Directors' report
3 - 4
Independent auditors' report
5 - 7
Statement of comprehensive income
8
Statement of financial position
9
Statement of changes in equity
10
Statement of cash flows
11
Analysis of net debt
12
Notes to the financial statements
13 - 25


 
INNOVATE FOODS LIMITED
 

STRATEGIC REPORT
FOR THE YEAR ENDED 31 DECEMBER 2023

Introduction
 
The directors have pleasure in presenting their strategic report for the period ended 31 December 2023.

Business review
 
The company is an award-winning producer of bespoke food for the foodservice and retail sectors with a balanced portfolio of blue-chip customers in UK, EU and beyond.
The company became part of the Frostkrone Food Group in 2020, an International Group with companies in a number of different countries. The company has continued to significantly benefit from this association, through gaining greater access to in-house technical expertise within the group, sharing best practices and leveraging opportunities of scale such as consolidated purchasing activities.  
Despite significant macroeconomic challenges faced in 2023, not least high inflation and the ongoing cost-of-living crisis, the company was able to consolidate revenues in 2023 after a high period of revenue growth in the previous year. 2023 revenues totalled £24.3m, a 1.5% increase on the previous year. 
In alignment with the promise inherent in the company name, we continue to focus on new product development as a fundamental strategy to drive sustainable growth in the future. There is a vast amount of experience and know-how within the company and wider group, which has been built up over many years, and product development was a continued key focus area in 2023. 
Gross Profit % decreased in 2023 as a result of higher raw material prices, a direct impact of the Russian invasion of Ukraine that commenced in 2022. The cost of living crisis had a significantly negative effect on the foodservice sector, with people opting not to eat out in bars and restaurants so much. Retail was also adversely affected, with consumers focussing on the necessities and reigning back expenditure on discretionary purchases.  The company was unable to pass on all material cost increases due to lower demand in the sector as a whole, and Gross margin % declined as a result. 
Despite the pressures of high inflation and lower macroeconomic activity driven by the cost of living crisis, the company was still able to grow revenues compared with 2022 and deliver an overall profit before tax of £680K.
The company maintained a strong financial position at the end of December 2023, with net assets of £8.2m, a £0.1m increase compared with the previous year. Stocks were reduced by £850K as focus was given to efficient working capital management. Debtors and Creditors were both significantly lower than the previous year due to good customer payment performance and the company ensuring that suppliers continued to be paid on time. The company ended the year with a healthy cash balance. 

Page 1

 
INNOVATE FOODS LIMITED
 

STRATEGIC REPORT (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023

Principal risks and uncertainties
 
The principal risks impacting the company centre around continuing volatility in market prices and external factors beyond its control, such as the Ukraine crisis, the ongoing effects of Covid-19, repercussions of Brexit, the cost of living challenges in the UK and domestic government policy.
Margins are monitored monthly and cashflow is monitored weekly. The directors make decisions to ensure that margins are maintained at a sustainable level in the long term.
The effects of the Ukraine invasion during 2022 plus the lingering elements of Covid-19 have seen Innovate Foods Limited make and execute decisive judgements in order to mitigate the effects. In both retail and foodservice the costs of living crisis has impacted consumer spending decisions while upward trajectory to energy costs has also directly affected decisions taken by the hospitality sector, including temporary or permanent closure of pubs, hotels and restaurants. The directors continue to monitor the situation and develop customer solutions through efficiency in manufacturing that meet the economic realities head on. The directors believe that the company is well place to meet these challenges due to its continuing investment in people, capital equipment and new product development for its wide and balanced customer portfolio.
Interest rate risk – the company currently has no bank borrowings so is not directly impacted by interest rate risks.
Currency risk – the company holds a proportion of its cash balance in Euros to mitigate this risk. Foreign exchange rates are regularly monitored however the company does not hedge currency risk.
Regular conversations are held with overseas and UK suppliers & partner companies to manage supply chains to best effect.

Financial key performance indicators
 
Key performance indicators are monitored over key areas including the monitoring of actual results against budget and prior periods. One of the company’s key performance indicators is turnover growth. Turnover increased by 1.5% to £24.32m from £23.97m in the previous year.


This report was approved by the board and signed on its behalf.



Mr P Skelding
Director

Date: 4 September 2024

Page 2

 
INNOVATE FOODS LIMITED
 

 
DIRECTORS' REPORT
FOR THE YEAR ENDED 31 DECEMBER 2023

The directors present their report and the financial statements for the year ended 31 December 2023.

Directors' responsibilities statement

The directors are responsible for preparing the Strategic report, the Directors' 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 applicable law and United Kingdom Accounting Standards (United Kingdom Generally Accepted Accounting Practice), including Financial Reporting Standard 102 ‘The Financial Reporting Standard applicable in the UK and Republic of Ireland'. 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 for the Company's financial statements and then apply them consistently;

make judgments 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 to enable them to ensure that the financial statements comply with the Companies Act 2006They 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.

Results and dividends

The profit for the year, after taxation, amounted to £523,822 (2022 - £1,304,156).

There are no proposed dividends for the year ended 31 December 2023. Amounts paid in the year amounted to £NIL (31 December 2022 - £NIL).

Directors

The directors who served during the year were:

Mr A M Dumbreck 
Mr F Dervieux 
Mr A Bach (appointed 8 May 2023, resigned 30 June 2024)
Mr P Skelding (appointed 8 May 2023)

Future developments

Core operations remain healthy and the directors consider the business to be in a strong financial position to exploit future opportunities, working in collaboration with its sister businesses 

Page 3

 
INNOVATE FOODS LIMITED
 

 
DIRECTORS' REPORT (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023

Disclosure of information to auditors

Each of the persons who are directors at the time when this Directors' report is approved has confirmed that:
 
so far as the director is aware, there is no relevant audit information of which the Company's auditors are unaware, and

the director has taken all the steps that ought to have been taken as a director in order to be aware of any relevant audit information and to establish that the Company's auditors are aware of that information.

Post balance sheet events

There have been no significant events affecting the Company since the year end.

Auditors

The auditorsSumer Auditco Limitedwill be proposed for reappointment in accordance with section 485 of the Companies Act 2006.

This report was approved by the board and signed on its behalf.
 





Mr P Skelding
Director

Date: 4 September 2024

Page 4

 
INNOVATE FOODS LIMITED
 

 
INDEPENDENT AUDITORS' REPORT TO THE MEMBERS OF INNOVATE FOODS LIMITED
 

Opinion


We have audited the financial statements of Innovate Foods Limited (the 'Company') for the year ended 31 December 2023, which comprise the Statement of comprehensive income, the Statement of financial position, the Statement of cash flows, the Statement of changes in equity and the related notes, including a summary of significant accounting policiesThe 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.


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 Auditors' 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 United Kingdom, including the Financial Reporting Council'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.


Other information


The other information comprises the information included in the Annual Report other than the financial statements and our Auditors' report thereon. The directors are responsible for the other information contained within the Annual ReportOur 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.


Page 5

 
INNOVATE FOODS LIMITED
 

 
INDEPENDENT AUDITORS' REPORT TO THE MEMBERS OF INNOVATE FOODS LIMITED (CONTINUED)


Opinion on other matters prescribed by the Companies Act 2006
 

In our opinion, based on the work undertaken in the course of the audit:


the information given in the Strategic report and the 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.


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 directors' remuneration specified by law are not made; or
we have not received all the information and explanations we require for our audit.


Responsibilities of directors
 

As explained more fully in the Directors' responsibilities statement set out on page 3, 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.


Page 6

 
INNOVATE FOODS LIMITED
 

 
INDEPENDENT AUDITORS' REPORT TO THE MEMBERS OF INNOVATE FOODS LIMITED (CONTINUED)


Auditors' 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 Auditors' report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with ISAs (UK) will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements.


Irregularities, including fraud, are instances of non-compliance with laws and regulations. We design procedures in line with our responsibilities, outlined above, to detect material misstatements in respect of irregularities, including fraud. The extent to which our procedures are capable of detecting irregularities, including fraud is detailed below:
We gained an understanding of the legal and regulatory framework applicable to the company and the industry in which it operates, and considered the risk of acts by the company that were contrary to applicable laws and regulations, including fraud. We designed audit procedures to respond to the risk, recognising that 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.
We focussed on laws and regulations which could give rise to a material misstatement in the financial statements, including, but not limited to, the Companies Act 2006 and UK tax legislation. Our tests included agreeing the financial statement disclosures to underlying supporting documentation, enquiries with management and enquiries of legal counsel. 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. We did not identify any key audit matters relating to irregularities, including fraud. As in all our audits, we also addressed the risk of management override of internal controls, including testing journals and evaluating.


A further description of our responsibilities for the audit of the financial statements is located on the Financial Reporting Council's website at: www.frc.org.uk/auditorsresponsibilities. This description forms part of our Auditors' report.


Use of our report
 

This report is made solely to the Company's members, as a body, in accordance with Chapter 3 of Part 16 of the Companies Act 2006Our 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 Auditors' 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.





Mark Gibson (Senior statutory auditor)
for and on behalf of
Sumer Auditco Limited
Chartered Accountants
Pentland House
Saltire Centre
Glenrothes
KY6 2AH

4 September 2024
Page 7

 
INNOVATE FOODS LIMITED
 

STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEAR ENDED 31 DECEMBER 2023

2023
2022
£
£

  

Turnover
 4 
24,323,529
23,969,634

Cost of sales
  
(21,350,346)
(19,909,705)

Gross profit
  
2,973,183
4,059,929

Distribution costs
  
(1,121,287)
(1,122,516)

Administrative expenses
  
(1,360,909)
(1,308,986)

Other operating income
 5 
202,183
1,100

Operating profit
 6 
693,170
1,629,527

Interest receivable and similar income
 9 
-
146

Interest payable and similar expenses
 10 
(12,712)
9,062

Profit before tax
  
680,458
1,638,735

Tax on profit
 11 
(156,636)
(334,579)

Profit for the financial year
  
523,822
1,304,156

There was no other comprehensive income for 2023 (2022:£NIL).

The notes on pages 13 to 25 form part of these financial statements.

Page 8

 
INNOVATE FOODS LIMITED
REGISTERED NUMBER: SC116286

STATEMENT OF FINANCIAL POSITION
AS AT 31 DECEMBER 2023

2023
2022
£
£

Fixed assets
  

Tangible assets
 12 
935,683
1,328,374

  
935,683
1,328,374

Current assets
  

Stocks
 13 
3,750,564
4,609,480

Debtors: amounts falling due within one year
 14 
5,442,789
7,428,274

Cash at bank and in hand
 15 
610,147
371,413

  
9,803,500
12,409,167

Creditors: amounts falling due within one year
 16 
(2,501,083)
(5,661,084)

Net current assets
  
 
 
7,302,417
 
 
6,748,083

Total assets less current liabilities
  
8,238,100
8,076,457

Creditors: amounts falling due after more than one year
 17 
(54,374)
(343,559)

Provisions for liabilities
  

Deferred tax
 20 
(77,775)
(150,769)

  
 
 
(77,775)
 
 
(150,769)

Net assets
  
8,105,951
7,582,129


Capital and reserves
  

Called up share capital 
 21 
8,580
8,580

Profit and loss account
 22 
8,097,371
7,573,549

  
8,105,951
7,582,129


The financial statements were approved and authorised for issue by the board and were signed on its behalf by: 




Mr P Skelding
Mr F Dervieux
Director
Director


Date: 4 September 2024

The notes on pages 13 to 25 form part of these financial statements.

Page 9

 
INNOVATE FOODS LIMITED
 

STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 DECEMBER 2023


Called up share capital
Profit and loss account
Total equity

£
£
£

At 1 January 2023
8,580
7,573,549
7,582,129



Profit for the year
-
523,822
523,822


At 31 December 2023
8,580
8,097,371
8,105,951


The notes on pages 13 to 25 form part of these financial statements.

STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 DECEMBER 2022


Called up share capital
Profit and loss account
Total equity

£
£
£

At 1 January 2022
8,580
6,269,393
6,277,973



Profit for the year
-
1,304,156
1,304,156


At 31 December 2022
8,580
7,573,549
7,582,129


The notes on pages 13 to 25 form part of these financial statements.
Page 10

 
INNOVATE FOODS LIMITED
 

STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED 31 DECEMBER 2023

2023
2022
£
£

Cash flows from operating activities

Profit for the financial year
523,822
1,304,156

Adjustments for:

Depreciation of tangible assets
458,121
612,248

Loss on disposal of tangible assets
1,038
-

Interest paid
12,712
(9,062)

Interest received
-
(146)

Taxation charge
156,636
334,579

Decrease/(increase) in stocks
858,916
(2,628,659)

Decrease/(increase) in debtors
1,531,120
(2,527,634)

(Decrease)/increase in creditors
(2,152,472)
1,569,080

Corporation tax received/(paid)
8,339
(356,399)

Net cash generated from operating activities

1,398,232
(1,701,837)


Cash flows from investing activities

Purchase of tangible fixed assets
(66,468)
(124,243)

Interest received
-
146

HP interest paid
(12,712)
9,062

Net advances (to)/from group companies
(804,395)
825,654

Net cash from investing activities

(883,575)
710,619

Cash flows from financing activities

Repayment of/new finance leases
(275,923)
31,691

Net cash used in financing activities
(275,923)
31,691

Net increase/(decrease) in cash and cash equivalents
238,734
(959,527)

Cash and cash equivalents at beginning of year
371,413
1,330,940

Cash and cash equivalents at the end of year
610,147
371,413


Cash and cash equivalents at the end of year comprise:

Cash at bank and in hand
610,147
371,413


The notes on pages 13 to 25 form part of these financial statements.

Page 11

 
INNOVATE FOODS LIMITED
 

ANALYSIS OF NET DEBT
FOR THE YEAR ENDED 31 DECEMBER 2023




At 1 January 2023
Cash flows
At 31 December 2023
£

£

£

Cash at bank and in hand

371,413

238,734

610,147

Debt due within 1 year

(1,170,615)

814,395

(356,220)

Finance leases

(616,044)

275,923

(340,121)


(1,415,246)
1,329,052
(86,194)

The notes on pages 13 to 25 form part of these financial statements.

Page 12

 
INNOVATE FOODS LIMITED
 

 
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023

1.


General information

Innovate Foods Limited is a private company, limited by shares, incorporated in Scotland; with registration number: SC116286. The registered office address is Barncraig, Boreland Road, Kirkcaldy, Fife, KY1 2YG.
The financial statements are presented in Sterling which is the functional currency of the company and rounded to the nearest £.
The principal activity of the company was that of producing and selling frozen food.

2.Accounting policies

 
2.1

Basis of preparation of financial statements

The financial statements have been prepared under the historical cost convention unless otherwise specified within these accounting policies and in accordance with Financial Reporting Standard 102, the Financial Reporting Standard applicable in the UK and the Republic of Ireland and the Companies Act 2006.

The preparation of financial statements in compliance with FRS 102 requires the use of certain critical accounting estimates. It also requires management to exercise judgment in applying the Company's accounting policies (see note 3).

The following principal accounting policies have been applied:

 
2.2

Foreign currency translation

Functional and presentation currency

The Company's functional and presentational currency is GBP.

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 rate. Non-monetary items measured at historical cost are translated using the exchange rate at the date of the transaction and non-monetary items measured at fair value are measured using the exchange rate when fair value was determined.

Page 13

 
INNOVATE FOODS LIMITED
 

 
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023

2.Accounting policies (continued)

 
2.3

Turnover

Turnover is recognised to the extent that it is probable that the economic benefits will flow to the Company and the turnover can be reliably measured. Turnover is measured as the fair value of the consideration received or receivable, excluding discounts, rebates, value added tax and other sales taxes. The following criteria must also be met before turnover is recognised:

Sale of goods

Turnover from the sale of goods is recognised when all of the following conditions are satisfied:
the Company has transferred the significant risks and rewards of ownership to the buyer;
the Company 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 Company will receive the consideration due under the transaction; and
the costs incurred or to be incurred in respect of the transaction can be measured reliably.

 
2.4

Operating leases: the Company as lessee

Rentals paid under operating leases are charged to profit or loss on a straight-line basis over the lease term.

Benefits received and receivable as an incentive to sign an operating lease are recognised on a straight-line basis over the lease term, unless another systematic basis is representative of the time pattern of the lessee's benefit from the use of the leased asset.

 
2.5

Research and development

Research and development expenditure is written off in the year in which it is incurred.

 
2.6

Finance costs

Finance costs are charged to profit or loss over the term of the debt using the effective interest method so that the amount charged is at a constant rate on the carrying amount. Issue costs are initially recognised as a reduction in the proceeds of the associated capital instrument.

 
2.7

Pensions

Defined contribution pension plan

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 profit or loss when they fall due. Amounts not paid are shown in accruals as a liability in the Statement of financial position. The assets of the plan are held separately from the Company in independently administered funds.

Page 14

 
INNOVATE FOODS LIMITED
 

 
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023

2.Accounting policies (continued)

 
2.8

Current and deferred taxation

The tax expense for the year comprises current and deferred tax. Tax is recognised in profit or loss except that a charge attributable to an item of income and expense recognised as other comprehensive income or to an item recognised directly in equity is also recognised in other comprehensive income or directly in equity respectively.

The current tax charge is calculated on the basis of tax rates and laws that have been enacted or substantively enacted by the reporting date in the countries where the Company operates and generates income.

Deferred tax balances are recognised in respect of all timing differences that have originated but not reversed by the reporting date, except that:
The recognition of deferred tax assets is limited to the extent that it is probable that they will be recovered against the reversal of deferred tax liabilities or other future taxable profits; and
Any deferred tax balances are reversed if and when all conditions for retaining associated tax allowances have been met.

Deferred tax balances are not recognised in respect of permanent differences except in respect of business combinations, when deferred tax is recognised on the differences between the fair values of assets acquired and the future tax deductions available for them and the differences between the fair values of liabilities acquired and the amount that will be assessed for tax. Deferred tax is determined using tax rates and laws that have been enacted or substantively enacted by the reporting date.

 
2.9

Tangible fixed assets

Tangible fixed assets under the cost model are stated 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.

Depreciation is charged so as to allocate the cost of assets less their residual value over their estimated useful lives, using the straight-line method.

Depreciation is provided on the following basis:

Freehold property
-
4% straight line
Plant and machinery
-
20% straight line
Motor vehicles
-
25% straight line
Fixtures and fittings
-
15% to 33.3% straight line

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.

Gains and losses on disposals are determined by comparing the proceeds with the carrying amount and are recognised in profit or loss.

Page 15

 
INNOVATE FOODS LIMITED
 

 
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023

2.Accounting policies (continued)

  
2.10

Impairment of fixed assets

Assets that are subject to depreciation 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 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 in the higher of an asset's fair value less costs to sell and value in use. For
the purposes of assessing impairment, assets are grouped at the lowest level for which there are
separately identifiable cash flows. 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.

 
2.11

Stocks

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 on the cost of purchase on a first in, first out basis. Work in progress and finished goods include labour and attributable overheads.

At each reporting date, stocks are 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 profit or loss.

 
2.12

Debtors

Short-term debtors are measured at transaction price, less any impairment. Loans receivable are measured initially at fair value, net of transaction costs, and are measured subsequently at amortised cost using the effective interest method, less any impairment.

 
2.13

Cash and cash equivalents

Cash is represented by cash in hand and deposits with financial institutions repayable without penalty on notice of not more than 24 hours. Cash equivalents are highly liquid investments that mature in no more than three months from the date of acquisition and that are readily convertible to known amounts of cash with insignificant risk of change in value.

In the Statement of cash flows, cash and cash equivalents are shown net of bank overdrafts that are repayable on demand and form an integral part of the Company's cash management.

 
2.14

Creditors

Short-term creditors are measured at the transaction price. Other financial liabilities, including bank loans, are measured initially at fair value, net of transaction costs, and are measured subsequently at amortised cost using the effective interest method.

Page 16

 
INNOVATE FOODS LIMITED
 

 
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023

2.Accounting policies (continued)

 
2.15

Financial instruments

The Company has elected to apply the recognition and measurement provisions of IFRS 9 Financial Instruments (as adopted by the UK Endorsement Board) with the disclosure requirements of Sections 11 and 12 and the other presentation requirements of FRS 102.

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.


3.


Judgments in applying accounting policies and key sources of estimation uncertainty

The preparation of the financial statements required management to make several judgments and estimates. The most significant areas of estimation within the Company's financial statements relate to the valuation of stock and depreciation.
The directors review the valuation method on a regular basis to ensure that the carrying value of stock remains appropriate. Due consideration is given to amounts realised following the year end in relation to stock included in the financial statements at the year end.
The directors review depreciation rates on a regular basis to ensure that the policy rates remain appropriate and fairly charge the cost of fixed assets over their predicted useful lives for each specific category of fixed assets.


4.


Turnover

The whole of the turnover is attributable to frozen food products.

Analysis of turnover by country of destination:

2023
2022
£
£

United Kingdom
21,314,025
21,613,752

Rest of Europe
806,694
193,910

Rest of the world
2,202,810
2,161,972

24,323,529
23,969,634



5.


Other operating income

2023
2022
£
£

Other operating income
202,183
1,100

202,183
1,100


Page 17

 
INNOVATE FOODS LIMITED
 

 
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023

6.


Operating profit

The operating profit is stated after charging:

2023
2022
£
£

Audit fees payable
11,418
9,492

Exchange differences
623
122,535

Other operating lease rentals
16,275
42,835

Depreciation of owned tangible fixed assets
221,300
313,001

Depreciation of tangible fixed assets held under finance lease
236,821
299,247


7.


Employees

Staff costs, including directors' remuneration, were as follows:


2023
2022
£
£

Wages and salaries
2,858,502
2,510,348

Social security costs
255,969
249,220

Cost of defined contribution scheme
100,128
154,526

3,214,599
2,914,094


The average monthly number of employees, including the directors, during the year was as follows:


        2023
        2022
            No.
            No.







Production
74
80



Sales
6
3



Administration
12
15



Directors
3
3

95
101


8.


Directors' remuneration

2023
2022
£
£

Directors' emoluments
130,000
107,718

Company contributions to defined contribution pension schemes
-
36,663

130,000
144,381


During the year retirement benefits were accruing to NIL directors (2022 - 1) in respect of defined contribution pension schemes.

Page 18

 
INNOVATE FOODS LIMITED
 

 
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023

9.


Interest receivable

2023
2022
£
£


Other interest receivable
-
146


10.


Interest payable and similar expenses

2023
2022
£
£


Finance leases and hire purchase contracts
12,712
(9,062)


11.


Taxation


2023
2022
£
£

Corporation tax


Current tax on profits for the year
229,631
364,182

Adjustments in respect of previous periods
-
(10,893)


229,631
353,289


Total current tax
229,631
353,289

Deferred tax


Origination and reversal of timing differences
(72,995)
(76,843)

Prior year adjustments
-
58,133

Total deferred tax
(72,995)
(18,710)


Taxation on profit on ordinary activities
156,636
334,579
Page 19

 
INNOVATE FOODS LIMITED
 

 
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
 
11.Taxation (continued)


Factors affecting tax charge for the year

The tax assessed for the year is higher than (2022 - higher than) the standard rate of corporation tax in the UK of 23.5% (2022 - 19%). The differences are explained below:

2023
2022
£
£


Profit on ordinary activities before tax
680,458
1,638,735


Profit on ordinary activities multiplied by standard rate of corporation tax in the UK of 23.5% (2022 - 19%)
159,908
311,360

Effects of:


Expenses not deductible for tax purposes, other than goodwill amortisation and impairment
74
350

Capital allowances for year in excess of depreciation
1,195
963

Tax charge recognised at a rate different than the standard standard rate
(4,422)
-

Adjustments to tax charge in respect of prior periods
-
47,240

Additional super deduction capital allowances
(119)
(6,892)

Deferred tax expense relating to changes in tax rates
-
(18,442)

Total tax charge for the year
156,636
334,579


Factors that may affect future tax charges

There is an increase in the UK corporation tax rate from 19% to 25% (effective from 1 April 2023) which
was enacted on 11 March 2021. The 19% rate will continue to apply for companies with profits up to
£50,000.

Page 20

 
INNOVATE FOODS LIMITED
 

 
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023

12.


Tangible fixed assets





Freehold property
Plant and machinery
Motor vehicles
Fixtures and fittings
Total

£
£
£
£
£



Cost or valuation


At 1 January 2023
410,876
4,334,058
33,422
116,329
4,894,685


Additions
-
52,432
-
14,036
66,468


Disposals
(1,038)
-
-
-
(1,038)



At 31 December 2023

409,838
4,386,490
33,422
130,365
4,960,115



Depreciation


At 1 January 2023
273,745
3,161,619
33,422
97,525
3,566,311


Charge for the year on owned assets
14,384
432,833
-
10,904
458,121



At 31 December 2023

288,129
3,594,452
33,422
108,429
4,024,432



Net book value



At 31 December 2023
121,709
792,038
-
21,936
935,683



At 31 December 2022
137,131
1,172,439
-
18,804
1,328,374

The net book value of assets held under finance leases or hire purchase contracts, included above, are as follows:


2023
2022
£
£



Plant and machinery
444,424
483,848

444,424
483,848


13.


Stocks

2023
2022
£
£

Raw materials and consumables
1,772,902
1,751,184

Finished goods and goods for resale
1,838,411
2,740,090

Work in progress
139,251
118,206

3,750,564
4,609,480


Page 21

 
INNOVATE FOODS LIMITED
 

 
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023

14.


Debtors

2023
2022
£
£


Trade debtors
5,267,289
6,502,171

Amounts owed by group undertakings
15,010
461,037

Other debtors
84,779
420,096

Prepayments and accrued income
75,711
44,970

5,442,789
7,428,274



15.


Cash and cash equivalents

2023
2022
£
£

Cash at bank and in hand
610,147
371,413



16.


Creditors: Amounts falling due within one year

2023
2022
£
£

Trade creditors
1,390,397
3,189,367

Amounts owed to group undertakings
600,861
1,621,652

Other taxation and social security
75,674
80,924

Obligations under finance lease and hire purchase contracts
285,747
272,485

Other creditors
60,530
394,197

Accruals and deferred income
87,874
102,459

2,501,083
5,661,084


Secured loans
Obligations under finance lease and hire purchase contracts of £285,747 (2022 - £272,485) are secured by the asset they relate to.

Page 22

 
INNOVATE FOODS LIMITED
 

 
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023

17.


Creditors: Amounts falling due after more than one year

2023
2022
£
£

Net obligations under finance leases and hire purchase contracts
54,374
343,559


Secured loans
Obligations under finance lease and hire purchase contracts of £54,374 (2022 - £343,559) are secured by the assets they relate to.


18.


Hire purchase and finance leases


Minimum lease payments under hire purchase fall due as follows:

2023
2022
£
£


Within one year
285,747
272,485

Between 1-5 years
54,374
343,559

340,121
616,044


19.


Financial instruments

2023
2022
£
£

Financial assets


Financial assets measured at fair value through profit or loss
610,147
371,413

Financial assets measured at amortised cost
5,293,662
7,383,304

5,903,809
7,754,717


Financial liabilities


Financial instruments measured at amortised cost
2,139,662
5,307,675


Financial assets measured at fair value through profit or loss comprise cash at bank and in hand.


Financial assets measured at amortised cost comprise trade debtors, other debtors and other amounts due from group undertakings


Financial liabilities measured at amortised cost comprise trade creditors, accruals, other creditors and  amounts owed to group undertakings.

Page 23

 
INNOVATE FOODS LIMITED
 

 
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023

20.


Deferred taxation




2023


£






At beginning of year
(150,769)


Charged to profit or loss
72,994



At end of year
(77,775)

The provision for deferred taxation is made up as follows:

2023
2022
£
£


Accelerated capital allowances
(79,760)
(169,479)

Other timing differences
1,985
18,710

(77,775)
(150,769)

The accelerated capital allowances are expected to reverse in subsequent period.  The other timing differences will reverse in the next financial year.  There are no expiry dates associated with either of these components.


21.


Share capital

2023
2022
£
£
Allotted, called up and fully paid



8,580 (2022 - 8,580) Ordinary shares of £1.00 each
8,580
8,580



22.


Reserves

Profit and loss account

The profit and loss account includes all current and prior period retained profits and losses.


23.


Contingent liabilities

A floating charge is in place in favour of Wilmington Trust SP Services (Frankfurt) GmbH as security agent pursuant to a EUR 122,500,000 facilities agreement (originally dated 31 January 2019 and subjected to future amendments) available to other group companies.

Page 24

 
INNOVATE FOODS LIMITED
 

 
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023

24.


Capital commitments


At 31 December 2023 the Company had capital commitments as follows:

2023
2022
£
£


Contracted for but not provided in these financial statements
-
32,934


25.


Pension commitments

The Company operates a defined contributions pension scheme. The assets of the scheme are held separately from those of the Company in an independently administered fund. The pension cost charge represents contributions payable by the Company to the fund and amounted to £100,128 (31 December 2022 - £154,526). Contributions totalling £18,982 (31 December 2022 - £19,168) were payable to the fund at the reporting date and are included in creditors.


26.


Commitments under operating leases

At 31 December 2023 the Company had future minimum lease payments due under non-cancellable operating leases for each of the following periods:

2023
2022
£
£


Not later than 1 year
55,914
44,750

Later than 1 year and not later than 5 years
46,639
65,326

102,553
110,076


27.


Related party transactions

The company has taken the exemption available under FRS 102 not to disclosure transactions with other wholly owned members of the Group.


28.


Controlling party

The company is a wholly owned subsidiary of Frostkrone UK Limited, a company registered in Scotland. The ultimate parent is Mozzaxx Co-Invest GmbH & Co. KG, a limited partnership registered in Germany.

Page 25