The directors present the strategic report for the year ended 31 May 2024.
Executive Summary
Founded in the heart of Yorkshire, Regal Foods is a manufacturer and distributor of a vast range of world food products as well as producers of a large selection of mainstream confectionery – resulting in being a brand for everyone and one that everyone loves.
We distribute over 400 food and drink products not only throughout the UK to over 3,000 retail outlets, but overseas – exporting to over 40 countries around the world.
A year of strong growth was a result of the company’s resilience and progress made in previous years and within the Directors expectation’s given the level of investment in the company’s infrastructure and facilities across all sites.
Whilst the effects of conflict in Ukraine have softened, we were impacted by recent events in the Middle East/Red Sea region resulting in us shorting certain products due to supply chain issues. The level of growth achieved was a testament to the strength of the brands within the company portfolio as well as demand in all the markets served.
This year thanks to NPD our product range has expanded with the launch of a new brand “The Cake Emporium” which is helping contribute to additional growth.
Our business has continued to push our export drive further in our second year of holding the Queens Award for Enterprise. The increase in International Trade, is a huge testament to our export growth and confirms our agenda to expand our brands reach and presence globally.
We still stay true to our ethos of being a “family business to be proud of” and our mission is to continue developing a successful portfolio of food brands and businesses.
Future Outlook
Our strategic focus has continued with an emphasis on infrastructure to help support our growth plans, which are almost complete, having plenty of room for scalability. Our IT and software systems (ERP and POS) are all now implemented across the business.
The focus will be to continue developing our existing food brands and continuing to affirm their presence as household favourite brands throughout the UK and Worldwide.
During the year to 31 May 2024, the group successfully acquired and integrated Love Handmade Cakes Limited, an exciting and diverse desserts manufacturer based in Leeds, the heart of West Yorkshire. The business fits well with our continued focus in having a sense of value, manufacturing and supplying quality products to remain a market leader.
Love Handmade Cakes Limited presents itself to be the ideal profile of a company which fits part of our sought-after companies. Whilst being a perfect scalable business, it offers an exciting challenge as the business requires modernising, having its capacity and inefficiencies challenged as well as investment in infrastructure. The product range has been expanded also to offer presence on retailer shelves.
The group continued its successful acquisition strategy by acquiring “Packaging ‘R’ Us” this has been relocated to a new unit in Leeds. With production due to commence later this year. The acquisition comes in response to the group’s long-term vision of expanding and strengthening its wholesale and food service offering, whilst providing a diverse product range within their brand portfolio. Packaging ‘R’ Us specialises in a wide range of disposable food packaging solutions, including foil containers, catering foil, disposable utensils, and plastic containers.
The focus will be to continue developing our existing food brands and continuing to affirm their presence as household favourite brands throughout the UK and Worldwide.
Our People
Putting our colleagues at the forefront of our business ensures individual talents are recognised and rewarded, recognising and harnessing talent and skills. We are a workplace for all, embracing all areas of diversity resulting in an inclusive and inspiring place to work.
We are committed to equal opportunities, ensuring the encouragement of career progression and development and promoting equal opportunities in all aspects of the business.
Regal Training Academy provides platforms to learn new skills and gain industry recognised qualifications, putting our employee’s personal development first.
Our Employee of the Month programme recognises individuals for their dedication and commitment to the work they undertake.
We are actively looking at employment through apprenticeships and gateway-to-work programs, offering employment opportunities for those needing that first step.
The wellbeing of our colleagues is priority with support opportunities provided through our HR department as well as the use of external professionals to support individual needs.
As a successful food manufacturer and distributor which established itself within the heart of a local community, it is vital within our operations that we have a major impact on our communities locally, throughout the UK and around the world. Charity work is at the heart of everything we do.
We have a strong commitment in supporting both local and international charities, as part of an on-going campaign to beat poverty we supply on a weekly basis 100’s of our products as donations to charities and food banks throughout the UK in particular our weekly support of Bradford Community Kitchen, whilst also delivering on initiative’s providing young people opportunities to participate in sociable activities. Like holding cake decorating workshops in local schools and hosting a “Bake Off” competition, this shows our strong commitment to addressing food insecurity and supporting vulnerable community members.
Customers often feel more connected to businesses that support their communities, and this can lead to increased loyalty and a stronger, community-centred reputation. Additionally, these efforts position Regal as a role model for social responsibility, setting a standard that can attract customers who value these principles.
As a major employer, we provide those within our community opportunities to further develop through mentoring opportunities, enhancing skills and knowledge.
Through the sponsorship and support of sporting clubs it’s important we support these areas of social activities that give many within our community a platform to aspire and inspire.
In our mission to break down barriers and allow room for diversity, we work with partners to deliver and support community outreach work.
Our Environment
Reducing our carbon foot and working towards a greener planet is fundamental within our product and distribution facilities. We are committed to manufacturing delicious foods in a way that is environmentally sustainable.
A thorough recycling programme is crucial in our daily operations with all card and paper materials recycled, along with the processing of food waste resulting in animal feed.
Working collectively with major supermarket chains ensures our packaging is classified as green and is suitable for recycling purposes.
The reduction of plastic micron used within our manufacturing sites and distribution centres reduces the amount of waste going to landfill each year.
The modernising and reducing of our distribution fleet ensures the minimising of our carbon foot. This practise results in us reaching our 3,000 shops smarter and greener.
As part of our ongoing energy reduction strategy, our sites have seen the latest state-of-art infrastructure and facilities installed. Further development will see solar power installed.
RFPG Holdings Limited operates in the very competitive UK bakery market. To manage this, we continue to develop our brand and strengthen our category management expertise. By holding a portfolio of food brands that people love it has helped us gain recognition in The Grocer Magazine as the “UK’s Top 10 Bakery Brands”. Consumer demand and trends are clearly key drivers of the products which the group supplies.
Exchange rates continue to fluctuate, but we secure forwards to minimise the effects of this. The availability, quality, and price of raw material continue to be volatile. However, these are issues that are just becoming the norm of business life and we seek to manage any difficulties collaboratively with both our supply chain and customers.
Having strong relationships with our supply chain has shown to be the right approach and one which we look to continue to build on.
The board assessed the following KPIs as the most effective measures for monitoring the group’s progress against its strategic objectives:
• Underlying sales growth- year on year increase in sales revenue.
• Group operating margin- group operating profit as a percentage of sales revenue.
• Free cash flow- cash generated from operations less tax and net interest paid
Performance against KPIs:
2024 2023
Underlying sales growth 24.7% 40.7%
Operating margin 5.5% 4.3%
Net cash inflow from operating activities £0.39M £1.60M
Our Vision and Core Values
Being a family business to be proud of is at the heart of what we do here at Regal. Our customers, suppliers and most importantly the brilliant team here at Regal help the groups vision to have a portfolio of food brands which always exceed our customers’ expectations. We are committed to investing in our infrastructure, people, systems, and local communities to achieve this.
Sustainability
The company takes its responsibility to wider society seriously and supports the development of a sustainable and socially responsible business model, underpinned by a set of values that guide our behaviour. We believe that the community must benefit by having our business here.
Here at Regal innovation is in our DNA. After a substantial amount of investment in NPD infrastructure the group has geared themselves up for expansion on all fronts in terms of ranging. The Board are always looking at new and more robust ways to help the business grow.
New products have not only helped the group diversify into sweets and snacks, but work is underway on the company’s new frozen division which will create more jobs for the local community, The board always aspire to be at the forefront of innovation.
Our in-house Research & Development centre and team have championed many ideas and overcome a number of uncertainties to ensure we are still at the forefront of New Product Development.
The group operates its business in a manner that actively seeks to prevent or minimize the possibility of its operations causing harm to people or the environment. We strive to provide the material and resources to educate and involve every individual in the group in achieving this objective.
The group currently holds the BRC accreditation. Compliance with technical standards relating to the supply of food products in today’s world is increasingly demanding. Our technical teams are very active, constantly monitoring all relevant aspects of internal performance, of our suppliers and that of our license and co pack partners, with a view to maintaining the highest food safety standards.
Our principal objectives in this area are to:
• Meet and, where appropriate, exceed the requirements of all relevant legislation.
• Seek to design best practice safety features into new buildings, products and services and manage our facilities wisely and to minimize any risk to health and safety.
• Measure divisional management teams for their contribution to the continuous improvement of safety, health, and environmental performance.
Conclusion
The financial performance this year reflects a strong upward trajectory, with a notable increase in revenue, underscoring the effectiveness of our operational strategies and cost management efforts. This growth demonstrates our resilience and adaptability in a challenging market environment, driven by our focus on quality, customer loyalty, and community engagement
We anticipate sustained growth and stability, ensuring we continue to thrive financially while delivering value to both our community and customers.
On behalf of the board
The directors present their annual report and financial statements for the year ended 31 May 2024.
The results for the year are set out on page 10.
Ordinary dividends were paid amounting to £132,801. The directors do not recommend payment of a further dividend.
The directors who held office during the year and up to the date of signature of the financial statements were as follows:
In accordance with the company's articles, a resolution proposing that BHP LLP be reappointed as auditor of the group will be put at a General Meeting.
This report has been prepared in accordance with the provisions applicable to companies entitled to the medium-sized companies exemption.
We have audited the financial statements of RFPG Holdings Limited (the 'parent company') and its subsidiaries (the 'group') for the year ended 31 May 2024 which comprise the group statement of comprehensive income, the group balance sheet, the company balance sheet, the group statement of changes in equity, the company statement of changes in equity, the group statement of cash flows and notes to the financial statements, including significant accounting policies. The financial reporting framework that has been applied in their preparation is applicable law and United Kingdom Accounting Standards, including Financial Reporting Standard 102 The Financial Reporting Standard applicable in the UK and Republic of Ireland (United Kingdom Generally Accepted Accounting Practice).
Basis for opinion
Conclusions relating to going concern
In auditing the financial statements, we have concluded that the directors' use of the going concern basis of accounting in the preparation of the financial statements is appropriate.
Based on the work we have performed, we have not identified any material uncertainties relating to events or conditions that, individually or collectively, may cast significant doubt on the group's and parent company’s ability to continue as a going concern for a period of at least twelve months from when the financial statements are authorised for issue.
Our responsibilities and the responsibilities of the directors with respect to going concern are described in the relevant sections of this report.
Other information
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.
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, relevant to the company, which could give rise to a material misstatement in the financial statements. Our tests included agreeing the financial statement disclosures to underlying supporting documentation, enquiries with management, review of the company's operation of controls within the year, in particular, cash and stock controls, and review of expenses, such as legal costs. There are inherent limitations in the audit procedures described 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.
As part of our audit, we addressed the risk of management override of internal controls, including testing of journals and review of nominal ledger. We evaluated whether there was evidence of bias by the directors that represented a risk of material misstatement due to fraud.
A further description of our responsibilities is available on the Financial Reporting Council’s website at: https://www.frc.org.uk/auditorsresponsibilities. This description forms part of our auditor's report.
Use of our report
This report is made solely to the company’s members, as a body, in accordance with Chapter 3 of Part 16 of the Companies Act 2006. Our audit work has been undertaken so that we might state to the company’s members those matters we are required to state to them in an auditor's report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the company and the company’s members as a body, for our audit work, for this report, or for the opinions we have formed.
As permitted by s408 Companies Act 2006, the company has not presented its own profit and loss account and related notes. The company’s profit for the year was £133,749 (2023 - £293,475 profit).
RFPG Holdings Limited (“the company”) is a private limited company domiciled and incorporated in England and Wales. The registered office is Regal House, Wallis Street, Bradford, West Yorkshire, BD8 9RR.
The group consists of RFPG Holdings Limited and all of its subsidiaries.
These financial statements have been prepared in accordance with FRS 102 “The Financial Reporting Standard applicable in the UK and Republic of Ireland” (“FRS 102”) and the requirements of the Companies Act 2006.
The financial statements are prepared in sterling, which is the functional currency of the company. Monetary amounts in these financial statements are rounded to the nearest £.
The financial statements have been prepared under the historical cost convention, [modified to include the revaluation of freehold properties and to include investment properties and certain financial instruments at fair value]. The principal accounting policies adopted are set out below.
The 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 for parent company information presented within the consolidated financial statements:
Section 7 ‘Statement of Cash Flows’: Presentation of a statement of cash flow and related notes and disclosures;
Section 11 ‘Basic Financial Instruments’ and Section 12 ‘Other Financial Instrument Issues: Interest income/expense and net gains/losses for financial instruments not measured at fair value; basis of determining fair values; details of collateral, loan defaults or breaches, details of hedges, hedging fair value changes recognised in profit or loss and in other comprehensive income;
Section 26 ‘Share based Payment’: Share-based payment expense charged to profit or loss, reconciliation of opening and closing number and weighted average exercise price of share options, how the fair value of options granted was measured, measurement and carrying amount of liabilities for cash-settled share-based payments, explanation of modifications to arrangements;
Section 33 ‘Related Party Disclosures’: Compensation for key management personnel.
The consolidated group financial statements consist of the financial statements of the parent company RFPG Holdings Limited together with all entities controlled by the parent company (its subsidiaries) and the group’s share of its interests in joint ventures and associates.
All financial statements are made up to 31 May 2024. Where necessary, adjustments are made to the financial statements of subsidiaries to bring the accounting policies used into line with those used by other members of the group.
All intra-group transactions, balances and unrealised gains on transactions between group companies are eliminated on consolidation. Unrealised losses are also eliminated unless the transaction provides evidence of an impairment of the asset transferred.
Entities in which the group holds an interest and which are jointly controlled by the group and one or more other venturers under a contractual arrangement are treated as joint ventures. Entities other than subsidiary undertakings or joint ventures, in which the group has a participating interest and over whose operating and financial policies the group exercises a significant influence, are treated as associates.
Investments in joint ventures and associates are carried in the group balance sheet at cost plus post-acquisition changes in the group’s share of the net assets of the entity, less any impairment in value. The carrying values of investments in joint ventures and associates include acquired goodwill.
If the group’s share of losses in a joint venture or associate equals or exceeds its investment in the joint venture or associate, the group does not recognise further losses unless it has incurred obligations to do so or has made payments on behalf of the joint venture or associate.
Unrealised gains arising from transactions with joint ventures and associates are eliminated to the extent of the group’s interest in the entity.
At the time of approving the financial statements, the directors have a reasonable expectation that the group has adequate resources to continue in operational existence for the foreseeable future. Thus the directors continue to adopt the going concern basis of accounting in preparing the financial statements.
Turnover is recognised at the fair value of the consideration received or receivable for goods and services provided in the normal course of business, and is shown net of VAT and other sales related taxes. The fair value of consideration takes into account trade discounts, settlement discounts and volume rebates.
When cash inflows are deferred and represent a financing arrangement, the fair value of the consideration is the present value of the future receipts. The difference between the fair value of the consideration and the nominal amount received is recognised as interest income.
Revenue from the sale of goods is recognised when the significant risks and rewards of ownership of the goods have passed to the buyer (usually on dispatch of the goods), the amount of revenue can be measured reliably, it is probable that the economic benefits associated with the transaction will flow to the entity and the costs incurred or to be incurred in respect of the transaction can be measured reliably.
Research expenditure is written off against profits in the year in which it is incurred. Identifiable development expenditure is capitalised to the extent that the technical, commercial and financial feasibility can be demonstrated.
The gain or loss arising on the disposal of an asset is determined as the difference between the sale proceeds and the carrying value of the asset, and is recognised in the profit and loss account.
Equity investments are measured at fair value through profit or loss, except for those equity investments that are not publicly traded and whose fair value cannot otherwise be measured reliably, which are recognised at cost less impairment until a reliable measure of fair value becomes available.
In the parent company financial statements, investments in subsidiaries, associates and jointly controlled entities are initially measured at cost and subsequently measured at cost less any accumulated impairment losses.
A subsidiary is an entity controlled by the group. Control is the power to govern the financial and operating policies of the entity so as to obtain benefits from its activities.
An associate is an entity, being neither a subsidiary nor a joint venture, in which the company holds a long-term interest and where the company has significant influence. The group considers that it has significant influence where it has the power to participate in the financial and operating decisions of the associate.
Investments in associates are initially recognised at the transaction price (including transaction costs) and are subsequently adjusted to reflect the group’s share of the profit or loss, other comprehensive income and equity of the associate using the equity method. Any difference between the cost of acquisition and the share of the fair value of the net identifiable assets of the associate on acquisition is recognised as goodwill. Any unamortised balance of goodwill is included in the carrying value of the investment in associates.
Losses in excess of the carrying amount of an investment in an associate are recorded as a provision only when the company has incurred legal or constructive obligations or has made payments on behalf of the associate.
In the parent company financial statements, investments in associates are accounted for at cost less impairment.
Entities in which the group has a long term interest and shares control under a contractual arrangement are classified as jointly controlled entities.
At each reporting period end date, the group reviews the carrying amounts of its tangible and intangible assets to determine whether there is any indication that those assets have suffered an impairment loss. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment loss (if any). Where it is not possible to estimate the recoverable amount of an individual asset, the company estimates the recoverable amount of the cash-generating unit to which the asset belongs.
The carrying amount of the investments accounted for using the equity method is tested for impairment as a single asset. Any goodwill included in the carrying amount of the investment is not tested separately for impairment.
Recoverable amount is the higher of fair value less costs to sell and value in use. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset for which the estimates of future cash flows have not been adjusted.
If the recoverable amount of an asset (or cash-generating unit) is estimated to be less than its carrying amount, the carrying amount of the asset (or cash-generating unit) is reduced to its recoverable amount. An impairment loss is recognised immediately in profit or loss, unless the relevant asset is carried at a revalued amount, in which case the impairment loss is treated as a revaluation decrease.
Recognised impairment losses are reversed if, and only if, the reasons for the impairment loss have ceased to apply. Where an impairment loss subsequently reverses, the carrying amount of the asset (or cash-generating unit) is increased to the revised estimate of its recoverable amount, but so that the increased carrying amount does not exceed the carrying amount that would have been determined had no impairment loss been recognised for the asset (or cash-generating unit) in prior years. A reversal of an impairment loss is recognised immediately in profit or loss, unless the relevant asset is carried at a revalued amount, in which case the reversal of the impairment loss is treated as a revaluation increase.
Basic financial assets, which include debtors and cash and bank balances, are initially measured at transaction price including transaction costs and are subsequently carried at amortised cost using the effective interest method unless the arrangement constitutes a financing transaction, where the transaction is measured at the present value of the future receipts discounted at a market rate of interest. Financial assets classified as receivable within one year are not amortised.
Other financial assets, 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.
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.
Financial assets are derecognised only when the contractual rights to the cash flows from the asset expire or are settled, or when the group 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.
Financial liabilities and equity instruments are classified according to the substance of the contractual arrangements entered into. An equity instrument is any contract that evidences a residual interest in the assets of the group after deducting all of its liabilities.
Basic financial liabilities, including creditors, bank loans, loans from fellow group companies and preference shares that are classified as debt, are initially recognised at transaction price unless the arrangement constitutes a financing transaction, where the debt instrument is measured at the present value of the future payments discounted at a market rate of interest. Financial liabilities classified as payable within one year are not amortised.
Debt instruments are subsequently carried at amortised cost, using the effective interest rate method.
Trade creditors are obligations to pay for goods or services that have been acquired in the ordinary course of business from suppliers. Amounts payable are classified as current liabilities if payment is due within one year or less. If not, they are presented as non-current liabilities. Trade creditors are recognised initially at transaction price and subsequently measured at amortised cost using the effective interest method.
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.
Financial liabilities are derecognised when the group's contractual obligations expire or are discharged or cancelled.
Equity instruments issued by the group are recorded at the proceeds received, net of transaction costs. Dividends payable on equity instruments are recognised as liabilities once they are no longer at the discretion of the group.
The tax expense represents the sum of the tax currently payable and deferred tax.
The tax currently payable is based on taxable profit for the year. Taxable profit differs from net profit as reported in the 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 group’s liability for current tax is calculated using tax rates that have been enacted or substantively enacted by the reporting end date.
Deferred tax liabilities are generally recognised for all timing differences and deferred tax assets are recognised to the extent that it is probable that they will be recovered against the reversal of deferred tax liabilities or other future taxable profits. Such assets and liabilities are not recognised if the timing difference arises from goodwill or from the initial recognition of other assets and liabilities in a transaction that affects neither the tax profit nor the accounting profit.
The carrying amount of deferred tax assets is reviewed at each reporting end date and reduced to the extent that it is no longer probable that sufficient taxable profits will be available to allow all or part of the asset to be recovered. Deferred tax is calculated at the tax rates that are expected to apply in the period when the liability is settled or the asset is realised. Deferred tax is charged or credited in the profit and loss account, except when it relates to items charged or credited directly to equity, in which case the deferred tax is also dealt with in equity. Deferred tax assets and liabilities are offset if, and only if, there is a legally enforceable right to offset current tax assets and liabilities and the deferred tax assets and liabilities relate to taxes levied by the same tax authority.
The costs of short-term employee benefits are recognised as a liability and an expense, unless those costs are required to be recognised as part of the cost of stock or fixed assets.
The cost of any unused holiday entitlement is recognised in the period in which the employee’s services are received.
Termination benefits are recognised immediately as an expense when the company is demonstrably committed to terminate the employment of an employee or to provide termination benefits.
Payments to defined contribution retirement benefit schemes are charged as an expense as they fall due.
Rentals payable under operating leases, including any lease incentives received, are charged to profit or loss on a straight line basis over the term of the relevant lease except where another more systematic basis is more representative of the time pattern in which economic benefits from the leased asset are consumed.
Rental income from operating leases is recognised on a straight line basis over the term of the relevant lease. Initial direct costs incurred in negotiating and arranging an operating lease are added to the carrying amount of the leased asset and recognised on a straight line basis over the lease term.
Government grants are recognised at the fair value of the asset received or receivable when there is reasonable assurance that the grant conditions will be met and the grants will be received.
A grant that specifies performance conditions is recognised in income when the performance conditions are met. Where a grant does not specify performance conditions it is recognised in income when the proceeds are received or receivable. A grant received before the recognition criteria are satisfied is recognised as a liability.
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.
In the application of the group’s accounting policies, the directors are required to make judgements, estimates and assumptions about the carrying amount of assets and liabilities that are not readily apparent from other sources. The estimates and associated assumptions are based on historical experience and other factors that are considered to be relevant. Actual results may differ from these estimates.
The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised where the revision affects only that period, or in the period of the revision and future periods where the revision affects both current and future periods.
The average monthly number of persons (including directors) employed by the group and company during the year was:
Their aggregate remuneration comprised:
The actual charge for the year can be reconciled to the expected charge for the year based on the profit or loss and the standard rate of tax as follows:
Land and buildings with a carrying amount of £2,007,525 (2022 - £2,040,925) were valued during the year ended 31 May 2022 by Walker Singleton Chartered Surveyors, independent valuers not connected with the company, on the basis of market value. The valuation conforms to International Valuation Standards and was based on recent market transactions on arm's length terms for similar properties. No change to the existing carrying value was necessary in the financial statements.
The following assets are carried at valuation. If the assets were measured using the cost model, the carrying amounts would be as follows:
Investment property comprises the elements of the company's buildings which are not occupied and used in the operation of the business. The property was acquired on an arms length basis and the split of value between freehold land and buildings and investment properties has been assessed based on occupation and usage.
Investment property was valued during the year ended 31 May 2022 by Walker Singleton Chartered Surveyors, independent valuers not connected with the company, on the basis of market value. The valuation conforms to International Valuation Standards and was based on recent market transactions on arm's length terms for similar properties. No change to the existing carrying value was necessary in the financial statements.
Details of the company's subsidiaries at 31 May 2024 are as follows:
The long-term loans are secured by fixed and floating charges over the group and all assets.
The following are the major deferred tax liabilities and assets recognised by the group and company, and movements thereon:
The deferred tax liability set out above relates to capital allowances. Approximately £116,000 is expected to reverse within 12 months.
From 2016 to May 2021 the group received total grant funding of £223,366 to contribute towards the purchase of a new property in order to increase both manufacturing capacity and employee numbers.
The grant is being released to the profit and loss account over the useful economic life of the property.
A defined contribution pension scheme is operated for all qualifying employees. The assets of the scheme are held separately from those of the group in an independently administered fund.
Amounts contracted for but not provided in the financial statements:
During the year the group entered into the following transactions with related parties:
The following amounts were outstanding at the reporting end date: