Company No:
Contents
| DIRECTORS | Greville Nicholas Richards |
| Jane Sybilla Richards |
| SECRETARY | Jane Sybilla Richards |
| REGISTERED OFFICE | Lambo Fraddam Road |
| Leedstown | |
| Hayle | |
| TR27 5PF | |
| United Kingdom |
| COMPANY NUMBER | 03193422 (England and Wales) |
| AUDITOR | Old Mill Audit Limited |
| Leeward House | |
| Fitzroy Road | |
| Exeter Business Park | |
| Exeter | |
| Devon | |
| EX1 3LJ |
The directors present their Strategic Report for the financial year ended 31 May 2024.
REVIEW OF THE BUSINESS
Turnover fell by 7.5% to £32.1 million (2023: £34.6 million) in the year ended 31 May 2024 with operating margin falling to 6.9% (2022: 7.2%). This is a positive result in the face of several headwinds faced in the year including rising costs, driven especially by a 9.7% rise in the National Living Wage. A combination of cost control and price management has maintained business profitability facilitating further strengthening of reserves.
KEY PERFORMANCE INDICATORS ('KPIS')
The Company’s key financial and performance indicators during the year were as follows
Turnover £’000: 2024: £32,066, 2023: £34,650, 2022: £25,394
Gross margin %, 2024; 9.9%, 2023: 9.1%, 2024: 1.3%
Operating margin %, 2024: 6.9%, 2023: 7.2%, 2022: (0.4)%
Debtor days, 2024: 19.9, 2023: 23.3, 2022: 12.2
Creditor days: 2024: 42.3, 2023: 47.2, 2022: 62.5
Stock days: 2024: 50.0, 2023: 37.1, 2022: 74.0
The overall performance of the business is consistent with prior year, albeit affected by reduced volumes.
PRINCIPAL RISKS AND UNCERTAINTIES
The company is subject to trading risk from the weather and continual fluctuation in raw material costs. This is combined with uncertainties in levels of customer demand caused by the current economic environment and reliance on a few key customers.
The directors effectively manage these risks by continually monitoring KPIs such as raw material and variable costs. They are continually developing new products and seeking to expand the customer base, as well as implementing operational efficiencies where appropriate.
Customer contracts are in place for the coming season and the planting preparation for this has gone well. The weather cannot be controlled however continued strengthening of operational management and control helps to mitigate these risks and reduce the impact of adverse conditions, should such arise.
A robust cash management process is in place to ensure the company manages its cashflow and trades within its facilities.
FUTURE DEVELOPMENTS
Southern England Farms Limited continues to develop and maintain its Summer and Winter programmes with the major supermarkets, it also looks to broaden its customer base, including export volumes and ultimately will look to continue to grow the top line to continue to be an affordable and high-quality producer. We recognise that in order to stay ahead of the competition and meet our customers’ demands that we will need to continue to invest in capital, in particular around automation, reducing our reliance on labour is vital going forwards, in order to mitigate against the high levels of inflation being seen and the potential shortages of labour in a post BREXIT world.
The company made a profit after tax for the year of £1.89 million (2023: £2.70 million) and ended the year with net assets of £5.13 million (2023: £3.28 million).
Approved by the Board of Directors and signed on its behalf by:
|
Greville Nicholas Richards
Director |
The directors present their annual report on the affairs of the Company, together with the financial statements and auditors’ report, for the financial year ended 31 May 2024.
PRINCIPAL ACTIVITIES
GOING CONCERN
REVIEW OF THE BUSINESS
Turnover for the financial year amounted to £32,066,093 (2023: £34,650,003). The Company earned a profit after taxation totalling £1,884,697 (2023: £2,696,937).
The net current asset position of the Company as at the financial year end amounted to £2,204,721 (2023: net current asset £148,490).
The net asset position of the Company as at the financial year end amounted to £5,125,447 (2023: net asset £3,278,250).
Further information is disclosed in the Strategic Report.
DIVIDENDS
The directors paid a dividend of £37,500 in the current financial year (2023: £537,500). The directors do not recommend payment of a final dividend.
FUTURE DEVELOPMENTS
Details of future developments can be found in the Strategic Report.
FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES
The Company's activities expose it to a number of financial risks including credit risk, cash flow risk, liquidity risk and price risk. The use of financial derivatives is governed by the Company's policies approved by the board of directors, which provide written principles on the use of financial derivatives to manage these risks. The Company does not use derivative financial instruments for speculative purposes.
Cash flow risk
The Company's activities expose it primarily to the financial risks of changes in foreign currency exchange rates and interest rates. The Company uses foreign exchange forward contracts and interest rate swap contracts to hedge these exposures.
Interest bearing assets and liabilities are held at fixed rate to ensure certainty of cash flows.
Credit risk
The Company's principal financial assets are bank balances and cash, trade debtors and other receivables, and investments.
The Company's credit risk is primarily attributable to its trade debtors. The amounts presented in the Balance Sheet are net of allowances for doubtful trade debtors. An allowance for impairment is made where there is an identified loss event which, based on previous experience, is evidence of a reduction in the recoverability of the cash flows. The credit risk on liquid funds and derivative financial instruments is limited because the counterparties are banks with high credit-ratings assigned by international credit-rating agencies.
The Company has no significant concentration of credit risk, with exposure spread over a large number of counterparties and customers.
Liquidity risk
In order to maintain liquidity to ensure that sufficient funds are available for ongoing operations and future developments, the Company uses a mixture of long-term and short-term debt finance.
Further details regarding liquidity risk can be found in the Statement of accounting policies in the financial statements.
Price risk
The directors of the company actively manage price risk by means of constant review of cost bases and negotiating agreements with main customers and suppliers.
DIRECTORS
The directors, who served during the financial year and to the date of this report except as noted, were as follows:
|
|
|
|
|
DISABLED EMPLOYEES
EMPLOYEE CONSULTATION
AUDITOR
Each of the persons who is a director at the date of approval of this report confirms that:
* So far as the director is aware, there is no relevant audit information of which the Company's auditor is unaware; and
* The director has taken all the steps that they ought to have taken as a director in order to make himself/herself aware of any relevant audit information and to establish that the Company's auditor is aware of that information.
Old Mill Audit Limited 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 auditors in the absence of an Annual General Meeting.
Approved by the Board of Directors and signed on its behalf by:
|
Greville Nicholas Richards
Director |
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), including FRS 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 financial 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. The directors 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.
Report on the audit of the financial statements
In our opinion the financial statements of Southern England Farms Limited (the 'Company'):
* Give a true and fair view of the state of the Company's affairs as at 31 May 2024 and of its profit for the financial year then ended;
* Have been properly prepared in accordance with United Kingdom Generally Accepted Accounting Practice, including Financial Reporting Standard 102 “The Financial Reporting Standard applicable in the UK and Republic of Ireland”; and
* Have been prepared in accordance with the requirements of the Companies Act 2006.
We have audited the financial statements which comprise:
* The Statement of Comprehensive Income;
* The Balance Sheet;
* The Statement of Changes in Equity;
* The Statement of Cash Flows; and
* The related notes 1 to 22.
The financial reporting framework that has been applied in their preparation is applicable law and United Kingdom Accounting Standards, including Financial Reporting Standard 102 "The Financial Reporting Standard applicable in the UK and Republic of Ireland" (United Kingdom Generally Accepted Accounting Practice).
Basis for opinion
We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and applicable law. Our responsibilities under those standards are further described in the auditor's responsibilities for the audit of the financial statements section of our report.
We are independent of the Company in accordance with the ethical requirements that are relevant to our audit of the financial statements in the UK, including the Financial Reporting Council's (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 annual report. Our opinion on the financial statements does not cover the other information and, except to the extent otherwise explicitly stated in our report, we do not express any form of assurance conclusion thereon.
Our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the course of the audit, or otherwise appears to be materially misstated. If we identify such material inconsistencies or apparent material misstatements, we are required to determine whether this gives rise to a material misstatement in the financial statements themselves. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact.
We have nothing to report in this regard.
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.
A further description of our responsibilities for the audit of the financial statements is located on the FRC’s website at: www.frc.org.uk/auditorsresponsibilities. This description forms part of our auditor’s report.
Extent to which the audit was considered capable of detecting irregularities, including fraud
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 review of quality inspection reports. 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 whether there was evidence of bias by the directors that represented a risk of material misstatement due to fraud.
In common with all audits under ISAs (UK), we are also required to perform specific procedures to respond to the risk of management override. In addressing the risk of fraud through management override of controls, testing the appropriateness of journal entries and other adjustments; assessing whether the judgements made in making accounting estimates are indicative of a potential bias; and evaluating the business rationale of any significant transactions that are unusual or outside the normal course of business.
In addition to the above, our procedures to respond to the risks identified included the following:
reviewing financial statement disclosures by testing to supporting documentation to assess compliance with provisions of relevant laws and regulations described as having a direct effect on the financial statements;
performing analytical procedures to identify any unusual or unexpected relationships that may indicate risks of material misstatement due to fraud;
enquiring of management concerning actual and potential litigation and claims, and instances of non-compliance with laws and regulations; and
reading minutes of meetings of those charged with governance.
In common with all audits under ISAs (UK), we are also required to perform specific procedures to respond to the risk of management override. In addressing the risk of fraud through management override of controls, testing the appropriateness of journal entries and other adjustments; assessing whether the judgements made in making accounting estimates are indicative of a potential bias; and evaluating the business rationale of any significant transactions that are unusual or outside the normal course of business.
In addition to the above, our procedures to respond to the risks identified included the following:
* reviewing financial statement disclosures by testing to supporting documentation to assess compliance with provisions of relevant laws and regulations described as having a direct effect on the financial statements;
* performing analytical procedures to identify any unusual or unexpected relationships that may indicate risks of material misstatement due to fraud;
* enquiring of management(, internal audit) and (in-house / external) legal counsel concerning actual and potential litigation and claims, and instances of non-compliance with laws and regulations.
Report on other legal and regulatory requirements
Opinions 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 Director' Report for the financial year for which the financial statements are prepared is consistent with the financial statements; and
* The Strategic Report and the Director' Report have been prepared in accordance with applicable legal requirements.
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 any material misstatements in the Strategic Report or the Director' Report.
Under the Companies Act 2006 we are required to report in respect of the following matters 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.
We have nothing to report in respect of these matters.
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.
For and on behalf of
Statutory Auditor
Fitzroy Road
Exeter Business Park
Exeter
Devon
EX1 3LJ
| Note | 2024 | 2023 | ||
| £ | £ | |||
| Turnover | 3 |
|
|
|
| Cost of sales | (
|
(
|
||
| Gross profit |
|
|
||
| Administrative expenses | (
|
(
|
||
| Other operating income |
|
|
||
| Operating profit |
|
|
||
| Interest receivable and similar income | 4 |
|
|
|
| Interest payable and similar expenses | 4 | (
|
(
|
|
| Profit before taxation | 5 |
|
|
|
| Tax on profit | 9 | (
|
|
|
| Profit for the financial year |
|
|
||
| Other comprehensive income | 0 | 0 | ||
| Total comprehensive income |
|
|
| Note | 2024 | 2023 | ||
| £ | £ | |||
| Fixed assets | ||||
| Tangible assets | 11 |
|
|
|
| 3,555,227 | 3,884,294 | |||
| Current assets | ||||
| Stocks | 12 |
|
|
|
| Debtors | 13 |
|
|
|
| Cash at bank and in hand |
|
|
||
| 8,593,594 | 7,424,920 | |||
| Creditors: amounts falling due within one year | 14 | (
|
(
|
|
| Net current assets | 2,204,721 | 148,490 | ||
| Total assets less current liabilities | 5,759,948 | 4,032,784 | ||
| Creditors: amounts falling due after more than one year | 15 | (
|
(
|
|
| Provision for liabilities | 16 | (
|
(
|
|
| Net assets | 5,125,447 | 3,278,250 | ||
| Capital and reserves | 18 | |||
| Called-up share capital |
|
|
||
| Capital redemption reserve |
|
|
||
| Profit and loss account |
|
|
||
| Total shareholders' funds | 5,125,447 | 3,278,250 |
The financial statements of Southern England Farms Limited (registered number:
|
Greville Nicholas Richards
Director |
| Called-up share capital | Capital redemption reserve | Profit and loss account | Total | ||||
| £ | £ | £ | £ | ||||
| At 01 June 2022 |
|
|
|
|
|||
| Profit for the financial year |
|
|
|
|
|||
| Total comprehensive income |
|
|
|
|
|||
| Dividends paid on equity shares (note 10) |
|
|
(
|
(
|
|||
| At 31 May 2023 |
|
|
|
|
|||
| At 01 June 2023 |
|
|
|
|
|||
| Profit for the financial year |
|
|
|
|
|||
| Total comprehensive income |
|
|
|
|
|||
| Dividends paid on equity shares (note 10) |
|
|
(
|
(
|
|||
| At 31 May 2024 |
|
|
|
|
|||
| 2024 | 2023 | ||
| £ | £ | ||
| Net cash flows from operating activities (note 20) |
|
|
|
| Cash flows from investing activities | |||
| Proceeds from sale of plant and machinery |
|
|
|
| Purchase of plant and machinery | (
|
(
|
|
| Interest received |
|
|
|
| Net cash flows from investing activities | (
|
(
|
|
| Cash flows from financing activities | |||
| Repayments of borrowings | (
|
(
|
|
| Payment of finance leases obligations | (275,088) | (386,685) | |
| Net cash flows from financing activities | (
|
(
|
|
| Net (decrease)/increase in cash and cash equivalents | (
|
|
|
| Cash and cash equivalents at beginning of year |
|
(
|
|
| Effect of foreign exchange rate changes |
|
|
|
| Cash and cash equivalents at end of year |
|
|
|
| Reconciliation to cash at bank and in hand: | |||
| Cash at bank and in hand at end of year |
|
|
|
| Cash and cash equivalents at end of year |
|
|
The principal accounting policies are summarised below. They have all been applied consistently throughout the financial year and to the preceding financial year, unless otherwise stated.
Southern England Farms Limited (the Company) is a private company, limited by shares, incorporated in the United Kingdom under the Companies Act 2006 and is registered in England and Wales. The address of the Company's registered office is Lambo Fraddam Road, Leedstown, Hayle, TR27 5PF, United Kingdom.
The principal activities are set out in the Strategic Report.
The financial statements have been prepared under the historical cost convention, and in accordance with Financial Reporting Standard 102 (FRS 102) applicable in the UK and Republic of Ireland issued by the Financial Reporting Council and the requirements of the Companies Act 2006.
The financial statements are presented in pounds sterling which is the functional currency of the Company and rounded to the nearest £.
The directors have assessed the Balance Sheet and likely future cash flows at the date of approving these financial statements. The directors have a reasonable expectation that the Company has adequate resources to continue in operational existence and to meet its financial obligations as they fall due for at least 12 months from the date of signing these financial statements. Accordingly, they continue to adopt the going concern basis in preparing the financial statements.
In the current year, the following new and revised standards and interpretations have been adopted by the company and have had an effect on future periods.
At the date of authorisation of these financial statements, the following standards and interpretations, which have not yet been applied in these financial statements, were in issue but not yet effective:
Exchange differences are recognised in the Statement of Comprehensive Income in the period in which they arise except for:
* exchange differences on transactions entered into to hedge certain foreign currency risks (see above); and
* exchange differences arising on gains or losses on non-monetary items which are recognised in the Statement of Comprehensive Income.
Revenue is is stated net of VAT and trade discounts.
Short term benefits
The cost of any unused holiday entitlement is recognised in the period in which the employee’s services are received.
Termination benefits are recognised as an expense when the Company is demonstrably committed to terminate the employment of an employee or to provide termination benefits.
Defined contribution schemes
For defined contribution schemes the amounts charged to the Statement of Comprehensive Income in respect of pension costs and other post-retirement benefits are the contributions payable in the financial year. Differences between contributions payable in the financial year and contributions actually paid are shown as either accruals or prepayments in the Balance Sheet.
Other long-term employee benefits are measured at the present value of the benefit obligation at the reporting date.
Deferred tax is recognised in respect of all timing differences that have originated but not reversed at the Balance Sheet date where transactions or events that result in an obligation to pay more tax in the future or a right to pay less tax in the future have occurred at the Balance Sheet date. Timing differences are differences between the Company's taxable profits and its results as stated in the financial statements that arise from the inclusion of gains and losses in tax assessments in periods different from those in which they are recognised in the financial statements.
Unrelieved tax losses and other deferred tax assets are recognised only to the extent that, on the basis of all available evidence, it can be regarded as more likely than not that there will be suitable taxable profits from which the future reversal of the underlying timing differences can be deducted.
Deferred tax is measured using the tax rates and laws that have been enacted or substantively enacted by the Balance Sheet date that are expected to apply to the reversal of the timing difference. Deferred tax relating to property, plant and equipment is measured using the revaluation model and investment property is measured using the tax rates and allowances that apply to the sale of the asset.
Where items recognised in the Statement of Comprehensive Income or equity are chargeable to or deductible for tax purposes, the resulting current or deferred tax expense or income is presented in the same component of comprehensive income or equity as the transaction or other event that resulted in the tax expense or income.
Current tax assets and liabilities are offset only when there is a legally enforceable right to set off the amounts and the Company intends either to settle on a net basis or to realise the asset and settle the liability simultaneously. Deferred tax assets and liabilities are offset only if: a) the Company has a legally enforceable right to set off current tax assets against current tax liabilities; and b) the deferred tax assets and deferred tax liabilities relate to income taxes levied by the same taxation authority on the Company and the Company intends either to settle current tax liabilities and assets on a net basis, or to realise the assets and settle the liabilities simultaneously, in each future period in which significant amounts of deferred tax liabilities or assets are expected to be settled or recovered.
| Land and buildings |
|
|
|
|
| Plant and machinery |
|
| Vehicles |
|
| Office equipment |
|
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.
Included within freehold land and buildings is freehold land with a cost of £570,111 which is not depreciated.
The Company as lessee
Rentals under operating leases are charged on a straight-line basis over the lease term, even if the payments are not made on such a basis. Benefits received and receivable as an incentive to sign an operating lease are similarly spread on a straight-line basis over the lease term.
The Company as lessor
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.
Assets, other than those measured at fair value, are assessed for indicators of impairment at each Balance Sheet date. If there is objective evidence of impairment, an impairment loss is recognised in the Statement of Comprehensive Income as described below.
Non-financial assets
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). The recoverable amount of an asset is the higher of its fair value less costs to sell and its 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.
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. 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.
Work in progress consists of seasonal crops, both summer and winter. Growing crops are stated using actual costs incurred to date including direct materials and direct labour.
At each reporting date, an assessment is made for impairment. Any excess of the carrying amount of stocks over its estimated selling price less costs to complete and sell is recognised as an impairment loss in profit or loss. Reversals of impairment losses are also recognised in profit or loss.
Financial assets and financial liabilities are recognised when the Company becomes a party to the contractual provisions of the instrument.
Financial liabilities and equity instruments are classified according to the substance of the contractual arrangements entered into. An equity instrument is any contract that evidences a residual interest in the assets of the Company after deducting all of its liabilities.
Financial assets and liabilities are only offset in the Balance Sheet when, and only when there exists a legally enforceable right to set off the recognised amounts and the Company intends either to settle on a net basis, or to realise the asset and settle the liability simultaneously.
Basic financial assets
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.
Financial assets are derecognised when and only when the contractual rights to the cash flows from the financial asset expire or are settled, or the Company transfers to another party substantially all of the risks and rewards of ownership of the financial asset, or the Company, despite having retained some, but not all, significant risks and rewards of ownership, has transferred control of the asset to another party.
Basic financial 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.
Financial liabilities are derecognised when the company’s contractual obligations expire or are discharged or cancelled.
Equity instruments
Equity instruments issued by the Company are recorded at the fair value of cash or other resources received or receivable, net of direct issue costs. If payment is deferred and the time value of money is material, the initial measurement is on a present value basis. Dividends payable on equity instruments are recognised as liabilities once they are no longer at the discretion of the Company.
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.
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.
The amount recognised as a provision is the best estimate of the consideration required to settle the present obligation at the Balance Sheet date, taking into account the risks and uncertainties surrounding the obligation. Where a provision is measured using the cash flows estimated to settle the present obligation, its carrying amount is the present value of those cash flows (when the effect of the time value of money is material).
When some or all of the economic benefits required to settle a provision are expected to be recovered from a third party, a receivable is recognised as an asset if it is virtually certain that reimbursement will be received and the amount of the receivable can be measured reliably.
The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the financial year in which the estimate is revised if the revision affects only that period, or in the financial year of the revision and future periods if the revision affects both current and future periods.
Planted stock is valued by including all costs directly associated with planting incurred between January and May 2024. Total costs at 31 May 2024 were £3,066,162 (2023 - £3,024,501). It also includes a percentage of other costs incurred, with the percentage applied being the estimated percentage associated with planting. The percentage is calculated by calculating labour hours relating to planting each month compared to total hours.
Where estimated selling price less costs to complete and sell is lower than cost, a stock provision will be recorded. The estimated selling price is determined with reference to market values. At 31 May 2024, the stock provision totalled £668,000 (2023 - £1,150,000).
The Company provides for defective stock and stock losses. The amount recognised as a provision is the best estimate of the stock write off required based on historical experience and current evidence available.
The annual depreciation charge for tangible fixed assets is sensitive to changes in the estimated useful economic lives and residual values of the assets. Determination of appropriate useful economic lives is a key judgement and the useful economic lives and residual values are re-assessed annually. They are amended when necessary to reflect current estimates, based on technological advancement, future investments, economic utilisation and the physical condition of the assets.
In light of the above impairment, management have undertaken an exercise to assess useful economic lives in respect of fixed assets and have revised useful economic lives downwards. In future years this will result in a higher depreciation charge being recognised.
Turnover represents the fair value of goods/services provided to customers during the financial year excluding value added tax.
Breakdown by business class
An analysis of the Company's turnover by class of business is set out below.
| 2024 | 2023 | ||
| £ | £ | ||
| Sale of goods | 32,066,093 | 34,650,003 |
Breakdown by geographical market:
An analysis of the Company's turnover by geographical market is set out below.
| 2024 | 2023 | ||
| £ | £ | ||
| UK | 32,066,093 | 34,650,003 |
| 2024 | 2023 | ||
| £ | £ | ||
| Interest receivable and similar income |
|
|
|
| Interest payable and similar expenses | (
|
(
|
|
| (174,251) | (175,064) |
Interest receivable and similar income
| 2024 | 2023 | ||
| £ | £ | ||
| Bank interest |
|
|
|
| Other interest receivable and similar income |
|
|
|
|
|
|
Bank interest includes interest on financial assets not measured at fair value through profit or loss £5,843 (2023: £2,459).
Interest payable and similar expenses
| 2024 | 2023 | ||
| £ | £ | ||
| Bank loans and overdrafts | (
|
(
|
|
| Finance leases and hire purchase contracts | (
|
(
|
|
| Other interest payable and similar expense | (
|
(
|
|
| (
|
(
|
Profit before taxation is stated after charging/(crediting):
| 2024 | 2023 | ||
| £ | £ | ||
| Depreciation of tangible fixed assets (note 11) |
|
|
|
| Impairment of tangible fixed assets (note 11) |
|
|
|
| Operating lease rentals |
|
|
|
| Foreign exchange losses |
|
|
|
| Gain on disposal of fixed assets |
|
(
|
|
| Depreciation of tangible fixed assets held under finance leases |
|
|
|
| Foreign exchange gain |
|
|
An analysis of the auditor's remuneration is as follows:
| 2024 | 2023 | ||
| £ | £ | ||
| Fees payable to the Company’s auditor and its associates for the audit of the Company's annual financial statements: | 0 | 0 | |
| Auditors remuneration | 19,900 | 18,408 | |
| Fees payable to the Company’s auditor and its associates for other services: | |||
| Accountancy & tax fees | 13,100 | 8,691 | |
| Total audit fees |
|
|
|
| 2024 | 2023 | ||
| Number | Number | ||
| The average monthly number of employees (including directors) was: | |||
| Management and administration |
|
|
|
| Farm workers |
|
|
|
| Packing and grading |
|
|
|
|
|
|
Their aggregate remuneration comprised:
| 2024 | 2023 | ||
| £ | £ | ||
| Wages and salaries |
|
|
|
| Social security costs |
|
|
|
| Other retirement benefit costs |
|
|
|
| 10,040,640 | 9,496,750 |
Included within staff costs is £161,409 (2023 - £176,717) relating to contributions towards a defined contribution pension plan.
| 2024 | 2023 | ||
| £ | £ | ||
| Directors' emoluments |
|
|
|
| Company contributions to money purchase pension schemes |
|
|
|
| 82,245 | 61,525 |
| 2024 | 2023 | ||
| Number | Number | ||
| Members of a money purchase pension scheme |
|
|
| 2024 | 2023 | ||
| £ | £ | ||
| Current tax on profit | |||
| UK corporation tax |
|
|
|
| Adjustments in respect of prior years | |||
| UK corporation tax | (
|
(
|
|
| Total current tax |
|
(
|
|
| Deferred tax | |||
| Origination and reversal of timing differences |
|
|
|
| Adjustment in respect of prior periods | (448,223) | 0 | |
| Total deferred tax |
|
|
|
| Total tax on profit |
|
(
|
The March 2021 Budget announced a further increase to the main rate of corporation tax to 25% from April 2023 as well as introducing a small profits rate of 19%. These rates were substantively enacted via the Finance Bill 2021 on 24 May 2021.
At the Balance Sheet date, it was estimated that the Company’s future profits will be applicable entirely to the main rate of corporation tax and therefore deferred tax balances as at 31 May 2024 have been re-calculated to 25%.
The tax assessed for the year is lower than (2023: lower than) the standard rate of corporation tax in the UK:
| 2024 | 2023 | ||
| £ | £ | ||
| Profit before taxation | 2,042,522 | 2,336,962 | |
| Tax on profit at standard UK corporation tax rate of 25.00% (2023: 20.00%) |
|
|
|
| Effects of: | |||
| Expenses not deductible for tax purposes |
|
|
|
| Income not taxable in determining taxable profit | (
|
|
|
| Adjustments in respect of prior years | (
|
|
|
| Fixed asset differences | 123,737 | 17,997 | |
| Research and development tax credit | 0 | (487,891) | |
| Deferred tax adjustments in respect of prior years | (448,223) | (459,234) | |
| MARS adjustment | 0 | 1,229 | |
| Effect of change in deferred tax | 0 | 105,992 | |
| Super deduction asset allowance | 0 | (27,730) | |
| Total tax charge/(credit) for year | 157,825 | (359,975) |
| 2024 | 2023 | ||
| £ | £ | ||
| Amounts recognised as distributions to equity holders in the financial year: | |||
| Interim dividend paid | 37,500 | 537,500 | |
| Land and buildings |
Plant and machinery | Vehicles | Office equipment | Total | |||||
| £ | £ | £ | £ | £ | |||||
| Cost | |||||||||
| At 01 June 2023 |
|
|
|
|
|
||||
| Additions |
|
|
|
|
|
||||
| At 31 May 2024 |
|
|
|
|
|
||||
| Accumulated depreciation | |||||||||
| At 01 June 2023 |
|
|
|
|
|
||||
| Charge for the financial year |
|
|
|
|
|
||||
| Impairment losses |
|
|
|
|
|
||||
| At 31 May 2024 |
|
|
|
|
|
||||
| Net book value | |||||||||
| At 31 May 2024 |
|
|
|
|
|
||||
| At 31 May 2023 |
|
|
|
|
|
Assets with a net carrying amount of £466,256 (2023 - £711,072) are pledged as security for the finance lease to which they relate.
| 2024 | 2023 | ||
| £ | £ | ||
| Stocks |
|
|
|
| Work in progress |
|
|
|
|
|
|
At 31 May 2024, the stock provision, included against stocks and work in progress, totalled £668,000 (2023 : £1,150,000).
| 2024 | 2023 | ||
| £ | £ | ||
| Trade debtors |
|
|
|
| VAT recoverable |
|
|
|
| Other debtors |
|
|
|
| Prepayments and accrued income |
|
|
|
| Amounts owed by directors (note 21) |
|
|
|
|
|
|
| 2024 | 2023 | ||
| £ | £ | ||
| Bank loans (secured) |
|
|
|
| Obligations under finance leases and hire purchase contracts (secured) |
|
|
|
| Directors loans (note 21) |
|
|
|
| Trade creditors |
|
|
|
| Corporation tax |
|
|
|
| Payroll taxes payable |
|
|
|
| Accruals |
|
|
|
| Other creditors |
|
|
|
|
|
|
Bank loans and overdrafts falling due within one year of £1,749,722 (2023 - £1,827,000) are secured by a fixed and floating charge over the assets of the company.
| 2024 | 2023 | ||
| £ | £ | ||
| Obligations under finance leases and hire purchase contracts (secured) |
|
|
| Bank loans | |||
| 2024 | 2023 | ||
| £ | £ | ||
| Between one and two years |
|
|
|
| Between two and five years |
|
|
|
| After five years |
|
|
|
|
|
|
||
| On demand or within one year |
|
|
|
| 1,749,722 | 1,827,000 |
| Finance leases | |||
| 2024 | 2023 | ||
| £ | £ | ||
| Between one and two years |
|
|
|
| Between two and five years |
|
|
|
| After five years |
|
|
|
|
|
|
||
| On demand or within one year |
|
|
|
| 384,170 | 631,781 |
| Directors loans | |||
| 2024 | 2023 | ||
| £ | £ | ||
| Between one and two years |
|
|
|
| Between two and five years |
|
|
|
| After five years |
|
|
|
|
|
|
||
| On demand or within one year |
|
|
|
| 0 | 113,922 |
| Total borrowings including finance leases | |||
| 2024 | 2023 | ||
| £ | £ | ||
| Between one and two years |
|
|
|
| Between two and five years |
|
|
|
|
|
|
||
| On demand or within one year |
|
|
|
| 2,133,892 | 2,572,703 |
| Deferred taxation | Total | ||
| £ | £ | ||
| At 01 June 2023 |
|
382,858 | |
| Charged to the Profit and Loss Account |
|
74,840 | |
| At 31 May 2024 |
|
457,698 | |
Deferred tax
| 2024 | 2023 | ||
| £ | £ | ||
| Accelerated capital allowances |
|
|
|
| Provision for deferred tax |
|
|
| 2024 | 2023 | ||
| £ | £ | ||
| At the beginning of financial year | (
|
(
|
|
| Charged to the Profit and Loss Account | (
|
(
|
|
| At the end of financial year | (
|
(
|
| 2024 | 2023 | ||
| £ | £ | ||
| Allotted, called-up and fully-paid | |||
|
|
|
|
|
|
|
|
|
|
| 100 | 100 | ||
| Presented as follows: | |||
| Called-up share capital presented as equity | 100 | 100 |
Each Ordinary B share has all rights attached, including full voting, equity and dividend rights. They are non redeemable.
The profit and loss reserve represents cumulative profits or losses, net of dividends paid and other adjustments.
The capital redemption reserve represents amounts arising from the purchase of own share capital.
Commitments
Total future minimum lease payments under non-cancellable operating leases are as follows:
| 2024 | 2023 | ||
| £ | £ | ||
| within one year |
|
|
|
| between one and five years |
|
|
|
|
|
|
Pensions
The Company operates a defined contribution pension scheme for the directors and employees. The assets of the scheme are held separately from those of the Company in an independently administered fund.
| 2024 | 2023 | ||
| £ | £ | ||
| Unpaid contributions due to the fund (inc. in other creditors) |
|
|
| 2024 | 2023 | ||
| £ | £ | ||
| Operating profit |
|
|
|
| Adjustment for: | |||
| Impairment loss on property, plant and equipment |
|
|
|
| Depreciation and amortisation |
|
|
|
| Profit on sale of plant and equipment |
|
(
|
|
| Increase in provisions |
|
|
|
| Adjustment for foreign exchange movements | (
|
|
|
| Operating cash flows before movement in working capital |
|
|
|
| (Increase)/decrease in stocks | (
|
|
|
| Increase in debtors | (
|
(
|
|
| Decrease in creditors | (
|
(
|
|
| Cash generated by operations |
|
|
|
| Income taxes (paid)/received | (
|
|
|
| Interest paid | (
|
(
|
|
| Net cash flows from operating activities |
|
|
| Balance at 01 June 2023 | Cash flows | New finance leases | Balance at 31 May 2024 | ||||
| £ | £ | £ | £ | ||||
| Cash at bank and in hand | 990,783 | ( 747,020) | 0 | 243,763 | |||
| 990,783 | ( 747,020) | 0 | 243,763 | ||||
| Finance leases | ( 631,781) | 275,086 | ( 27,475) | ( 384,170) | |||
| Borrowings excluding overdrafts | ( 1,827,000) | 77,278 | 0 | ( 1,749,722) | |||
| ( 2,458,781) | 352,364 | ( 27,475) | ( 2,133,892) | ||||
| Net debt | (
|
( 394,656) | ( 27,475) | (
|
Transactions with related parties or connected persons
Amounts owed by related parties
| 2024 | 2023 | ||
| £ | £ | ||
| Companies under common control | 1,660,083 |
|
Rent paid to related parties
| 2024 | 2023 | ||
| £ | £ | ||
| Key management personnel | 45,630 | 141,338 | |
| Other related parties | 36,495 | 41,595 | |
| 82,125 | 182,933 |
Transactions with the entity’s directors (or members of its governing body)
Amounts owed to directors
| 2024 | 2023 | ||
| £ | £ | ||
| Directors Loan Account | 0 | 113,708 | |
| Directors Loan Account | 0 | 214 | |
|
|
|
Advances
Guarantees
By virtue of his shareholding, Greville Richards, a director, is the ultimate controlling party.