Morning Foods, Limited
Registered number: 00375854
Annual report and consolidated financial statements
For the year ended 31 July 2024
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MORNING FOODS, LIMITED
COMPANY INFORMATION
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Chartered Accountants & Statutory Auditor
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MORNING FOODS, LIMITED
CONTENTS
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Independent Auditor's Report
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Consolidated Statement of Comprehensive Income
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Consolidated Statement of Financial Position
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Company Statement of Financial Position
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Consolidated Statement of Changes in Equity
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Company Statement of Changes in Equity
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Consolidated Statement of Cash Flows
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Notes to the Financial Statements
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MORNING FOODS, LIMITED
GROUP STRATEGIC REPORT
FOR THE YEAR ENDED 31 JULY 2024
The Directors present their Group Strategic Report for the year ended 31 July 2024.
The Group continuously monitors the performance of its operations and other activities through regular reviews using Key Performance Indicators (KPI) tools for measurement.
The volatility of commodity markets remains an ongoing and critical issue. As in previous years, the current period was impacted by severe market forces and genuine shortages of certain commodities. Oats had a particularly bad UK harvest, with premiums over other grains extending to record highs. This increase in input commodity prices led to an increased turnover for the year. The loss on disposal of subsidiaries and discontinued operations during the year reflect a group reorganisation. All entities remain under group control.
The comparative Consolidated Statement of Comprehensive Income has had certain costs reallocated to better reflect their nature. There is no impact on profit before taxation or net assets.
Principal risks and uncertainties
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Managing commodity risks remains a key skill and the Group remains committed to long-term partnerships, especially with oat growers. The Group continues to invest in the generation of energy from renewable sources to operate on a more efficient and lower carbon footing.
Financial key performance indicators
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The key performance indicators that the Group uses are relevant to the type of business it operates in. The financial key performance indicators are specifically related to volumes, growth, turnover and balance sheet strength all of which are monitored on a continuous basis and the Directors remain satisfied with that performance.
Other key performance indicators
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The other key performance indicators that the Group uses are operational (staff retention and motivational) and customer service (customer feedback, customer retention, and the attraction of new customers). These KPI indicators are within the targets set for the year.
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MORNING FOODS, LIMITED
GROUP STRATEGIC REPORT (CONTINUED)
FOR THE YEAR ENDED 31 JULY 2024
Directors' statement of compliance with duty to promote the success of the Group
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Section 172(1) of the Companies Act 2006 requires Directors to act in the way they consider, in good faith, would be most likely to promote the success of the Group for the benefit of its members, and in doing so have regard (amongst other matters) to:
a. the likely consequences of any decisions in the long term,
b. the interests of the Group's employees,
c. the need to foster the company's business relationships with suppliers, customers, and others,
d. the impact of the Group's operations on the community and the environment,
e. the desirability of the Group maintaining a reputation for high standards of business conduct, and
f. the need to act fairly as between members of the Group.
The Directors consider that they act in ways most likely to promote the success of the Group and that strategic decisions fully consider the factors associated with s172. The strategy of the board is to enhance the Group's position by recognising the changing requirements of our stakeholders on whom the long-term success of our business is dependent.
Our employee, customer, and supplier stakeholders were fundamental to the significant decisions made in the year, with the aim of strengthening the opportunity for long term business success. Communication with stakeholders is facilitated formally and informally on a regular basis to ensure effective understanding.
The Group is focused on managing and reducing its carbon footprint and use of energy through a variety of measures on an ongoing basis. In the community, the business continually employs local skills and has supported a variety of local causes.
This report was approved by the board on 29 January 2025 and signed on its behalf.
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MORNING FOODS, LIMITED
DIRECTORS' REPORT
FOR THE YEAR ENDED 31 JULY 2024
The directors present their report and the financial statements for the year ended 31 July 2024.
Directors' responsibilities statement
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The directors are responsible for preparing the Group Strategic Report, the Directors' Report and the consolidated 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 the Group and of the profit or loss of the Group for that period.
In preparing these financial statements, the directors are required to:
∙select suitable accounting policies for the Group's financial statements and then apply them consistently;
∙make judgments and accounting estimates that are reasonable and prudent;
∙state whether applicable UK Accounting Standards have been followed, subject to any material departures disclosed and explained in the financial statements;
∙prepare the financial statements on the going concern basis unless it is inappropriate to presume that the Group 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 the Group and to enable them to ensure that the financial statements comply with the Companies Act 2006. They are also responsible for safeguarding the assets of the Company and the Group and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.
The principal activity of the entity continues to be that of oat milling and cereal manufacture. The subsidiary undertakings are involved in grain and feed milling, food processing, energy generation and supply, logistics services, and scientific services.
The profit for the year, after taxation, amounted to £906,998 (2023 - £5,007,717).
During the year the Company paid a dividend of £Nil (2023 - £Nil).
The directors who served during the year were:
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MORNING FOODS, LIMITED
DIRECTORS' REPORT (CONTINUED)
FOR THE YEAR ENDED 31 JULY 2024
The Directors have produced an extended forecast, 'the forecast' for the period to 31 July 2026. These forecasts are monitored monthly by the Board against actual trading performance. The Directors continue to monitor the impact of world events on various commodity prices however the long-term outlook remains uncertain. The Directors have also considered the impact of supply chain issues and inflationary pressures.
The Directors are confident in the forecasts for the business in terms of ongoing demand, source of supply and productive ability and in the short and long term liquidity. The Directors are satisfied that a scenario that could result in the business not being a going concern are considered extremely remote.
After making enquiries and considering the matters described above for a period of more than 12 months post approval of the accounts, the Directors have a reasonable expectation that the Group and Company has adequate resources to continue in operational existence for the foreseeable future. For these reasons, they continue to adopt the going concern basis in preparing the Annual Report and financial statements.
Financial risk management
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The Company and Group manages its risk to foreign currency fluctuations using bank accounts in foreign currencies to match purchase and sales transactions.
The Company and Group's exposure to risk on the supply and price of oats is, in the opinion of the Directors, managed using contracts with suppliers which are negotiated at the start of each growing season. Any grain requirements over contracted amounts, or in the event of an unexpected poor growing season, are purchased on the open market at market prices.
The Company and Group make sales on normal credit terms and manages the related risks through its normal credit control procedures. In the opinion of the Directors the exposure to such risks has been assessed and at present its deemed to be low and at an acceptable level for the Group and the Company to continue operating.
The Group and the Company do not hedge interest payments on any of its borrowings or foreign currency transactions.
Engagement with employees
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It is the policy of the Company and Group to encourage and develop every employee to realise their maximum potential. Wherever possible, vacancies are filled from within the Company and Group and adequate opportunities for internal promotion are created.
The Company and Group has continued its practice of keeping employees informed of matters affecting them as employees and the financial and economic factors affecting the performance of the Company and Group.
Engagement with suppliers, customers and others
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The Group strives to have strong mutually beneficial relationships with suppliers, customers, and government bodies. The Directors continually assess these stakeholders to ensure the strategy of the Group is delivered in the best way over the long term. The Group assesses the impact on the Company's operations on the community and is pleased to be able to support many local initiatives.
Qualifying third party indemnity provisions
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Throughout the year and up to the date of this report the Company maintained qualifying third-party indemnity insurance for the Directors.
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MORNING FOODS, LIMITED
DIRECTORS' REPORT (CONTINUED)
FOR THE YEAR ENDED 31 JULY 2024
Greenhouse gas emissions, energy consumption and energy efficiency action
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The Group's energy consumption for the year was 94,949,390kWH (2023 - 88,696,748kWH), resulting in total gross tCO2e emissions of 18,165 (2023 - 18,100):
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Emissions from purchased electricity, including for purposes of transport (tCO2e)
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Emissions from the combustion of gas (tCO2e)
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Emissions from the combustion of fuel for the purposes of transport (tCO2e)
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Intensity Ratio: tCO2e per EBITDA
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These figures have been compiled in accordance with the 2019 UK Government environmental reporting guidelines and the UK Government 2024 GHG Conversion Factors. The scope includes all Group sites in the UK.
We have exported electricity from on-site renewables to the grid. We have multiplied the amount of electricity by the grid average emissions factor and deducted the emissions figure from our gross emissions figure.
The Group is committed to reducing its carbon footprint and participates in a Climate Change Agreement. The Group also participates in the UK Government Energy Savings Opportunity Scheme. The Group has taken energy efficient action by self-generating a proportion of its energy from renewable sources. LED lighting and electric car charging continue to be installed throughout the year.
Disclosure of information to auditor
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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 and the Group's auditor is 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 and the Group's auditor is aware of that information.
Post balance sheet events
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There have been no significant events affecting the Group since the year end.
During the year Forvis Mazars LLP were appointed as entity auditors for the year ended 31 July 2024.
This report was approved by the board on 29 January 2025 and signed on its behalf.
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MORNING FOODS, LIMITED
INDEPENDENT AUDITOR'S REPORT TO THE MEMBERS OF MORNING FOODS, LIMITED
Opinion
We have audited the financial statements of Morning Foods, Limited (the ‘Parent Company’) and its subsidiaries (the 'Group') for the year ended 31 July 2024 which comprise the Consolidated Statement of Comprehensive Income, the Consolidated and Company Statement of Financial Positions, the Consolidated and Company Statement of Changes in Equity, the Consolidated Statement of Cash Flows and notes to the financial statements, including a summary of significant accounting policies.
The financial reporting framework that has been applied in their preparation is applicable law and United Kingdom Accounting Standards, including FRS 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 Group's and Parent Company’s affairs as at 31 July 2024 and of the Group's 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 Auditor’s responsibilities for the audit of the financial statements section of our report. We are independent of the Group and the Parent Company in accordance with the ethical requirements that are relevant to our audit of the financial statements in the UK, including the FRC’s Ethical Standard and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
Conclusions relating to going concern
In auditing the financial statements, we have concluded that the directors' use of the going concern basis of accounting in the preparation of the financial statements is appropriate.
Based on the work we have performed, we have not identified any material uncertainties relating to events or conditions that, individually or collectively, may cast significant doubt on the Group's and of the Parent Company’s ability to continue as a going concern for a period of at least twelve months from when the financial statements are authorised for issue.
Our responsibilities and the responsibilities of the directors with respect to going concern are described in the relevant sections of this report.
Other information
The other information comprises the information included in the annual report, other than the financial statements and our auditor’s report thereon. The directors are responsible for the other information contained within the annual report. Our opinion on the financial statements does not cover the other information and, except to the extent otherwise explicitly stated in our report, we do not express any form of assurance conclusion thereon.
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MORNING FOODS, LIMITED
INDEPENDENT AUDITOR'S REPORT TO THE MEMBERS OF MORNING FOODS, LIMITED
Our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the course of the audit, or otherwise appears to be materially misstated. If we identify such material inconsistencies or apparent material misstatements, we are required to determine whether this gives rise to a material misstatement in the financial statements themselves. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact.
We have nothing to report in this regard.
Opinions on other matters prescribed by the Companies Act 2006
In our opinion, based on the work undertaken in the course of 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 light of the knowledge and understanding of the Group and Parent Company and their environment obtained in the course of the audit, we have not identified material misstatements in the Strategic Report or the Directors' Report.
We have nothing to report in respect of the following matters in relation to which the Companies Act 2006 requires us to report to you if, in our opinion:
∙adequate accounting records have not been kept by the Parent Company, or returns adequate for our audit have not been received from branches not visited by us; or
∙the Parent Company financial statements are not in agreement with the accounting records and returns; or
∙certain disclosures of directors' remuneration specified by law are not made; or
∙we have not received all the information and explanations we require for our audit.
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MORNING FOODS, LIMITED
INDEPENDENT AUDITOR'S REPORT TO THE MEMBERS OF MORNING FOODS, LIMITED
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 Group's and the Parent Company’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the directors intend either to liquidate the Group or the Parent 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.
The extent to which our procedures are capable of detecting irregularities, including fraud is detailed below.
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.
Based on our understanding of the Group and the Parent Company and their industry, we considered that non-compliance with the following laws and regulations might have a material effect on the financial statements: employment regulation, health and safety regulation, and anti-money laundering regulation.
To help us identify instances of non-compliance with these laws and regulations, and in identifying and assessing the risks of material misstatement in respect to non-compliance, our procedures included, but were not limited to:
∙Inquiring of management and, where appropriate, those charged with governance, as to whether the Group and the Parent Company is in compliance with laws and regulations, and discussing their policies and procedures regarding compliance with laws and regulations;
∙Inspecting correspondence, if any, with relevant licensing or regulatory authorities;
∙Communicating identified laws and regulations to the engagement team and remaining alert to any indications of non-compliance throughout our audit; and
∙Considering the risk of acts by the Group and the Parent Company which were contrary to applicable laws and regulations, including fraud.
We also considered those laws and regulations that have a direct effect on the preparation of the financial statements, such as tax legislation, pension legislation, the Companies Act 2006.
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MORNING FOODS, LIMITED
INDEPENDENT AUDITOR'S REPORT TO THE MEMBERS OF MORNING FOODS, LIMITED
In addition, we evaluated the directors' and management’s incentives and opportunities for fraudulent manipulation of the financial statements, including the risk of override of controls, and determined that the principal risks were related to posting manual journal entries to manipulate financial performance, management bias through judgements and assumptions in significant accounting estimates, revenue recognition (which we pinpointed to the cut-off assertion), and significant one-off or unusual transactions.
Our audit procedures in relation to fraud included but were not limited to:
∙Making enquiries of the directors and management on whether they had knowledge of any actual, suspected or alleged fraud;
∙Gaining an understanding of the internal controls established to mitigate risks related to fraud;
∙Discussing amongst the engagement team the risks of fraud; and
∙Addressing the risks of fraud through management override of controls by performing journal entry testing.
There are inherent limitations in the audit procedures described above and the primary responsibility for the prevention and detection of irregularities including fraud rests with management. As with any audit, there remained a risk of non-detection of irregularities, as these may involve collusion, forgery, intentional omissions, misrepresentations or the override of internal controls.
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 auditor’s report.
Use of the audit 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.
Neil Barton (Senior Statutory Auditor)
for and on behalf of
Forvis Mazars LLP
Chartered Accountants and Statutory Auditor
One St. Peter's Square
Manchester
M2 3DE
29 January 2025
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MORNING FOODS, LIMITED
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEAR ENDED 31 JULY 2024
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Loss on disposal of subsidiaries
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Interest receivable and similar income
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Interest payable and similar expenses
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Profit for the financial year
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There were no recognised gains and losses for 2024 or 2023 other than those included in the consolidated statement of comprehensive income.
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There was no other comprehensive income for 2024 (2023:£NIL).
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The notes on pages 19 to 42 form part of these financial statements.
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Please see note 28 for further information in relation to the restatement.
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MORNING FOODS, LIMITED
REGISTERED NUMBER: 00375854
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
AS AT 31 JULY 2024
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Debtors: amounts falling due after more than one year
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Debtors: amounts falling due within one year
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Creditors: amounts falling due within one year
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Total assets less current liabilities
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Creditors: amounts falling due after more than one year
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Provisions for liabilities
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Capital redemption reserve
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MORNING FOODS, LIMITED
REGISTERED NUMBER: 00375854
CONSOLIDATED STATEMENT OF FINANCIAL POSITION (CONTINUED)
AS AT 31 JULY 2024
The financial statements were approved and authorised for issue by the board and were signed on its behalf on 29 January 2025.
The notes on pages 19 to 42 form part of these financial statements.
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MORNING FOODS, LIMITED
REGISTERED NUMBER: 00375854
COMPANY STATEMENT OF FINANCIAL POSITION
AS AT 31 JULY 2024
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Debtors: amounts falling due after more than one year
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Debtors: amounts falling due within one year
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Creditors: amounts falling due within one year
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Total assets less current liabilities
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Creditors: amounts falling due after more than one year
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Provisions for liabilities
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Capital redemption reserve
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MORNING FOODS, LIMITED
REGISTERED NUMBER: 00375854
COMPANY STATEMENT OF FINANCIAL POSITION (CONTINUED)
AS AT 31 JULY 2024
The Company has taken advantage of the exemption allowed under Section 408 of the Companies Act 2006 and has not presented its own Statement of Comprehensive Income in these financial statements. The profit after tax of the Parent Company for the year was £4,385,365 (2023 - £3,548,479).
The financial statements were approved and authorised for issue by the board and were signed on its behalf on 29 January 2025.
The notes on pages 19 to 42 form part of these financial statements.
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MORNING FOODS, LIMITED
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 JULY 2024
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Capital redemption reserve
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Comprehensive income for the year
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Total comprehensive income for the year
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Contributions by and distributions to owners
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Total transactions with owners
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Comprehensive income for the year
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Total comprehensive income for the year
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The notes on pages 19 to 42 form part of these financial statements.
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MORNING FOODS, LIMITED
COMPANY STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 JULY 2024
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Capital redemption reserve
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Comprehensive income for the year
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Total comprehensive income for the year
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Contributions by and distributions to owners
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Total transactions with owners
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Comprehensive income for the year
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Total comprehensive income for the year
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The notes on pages 19 to 42 form part of these financial statements.
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MORNING FOODS, LIMITED
CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED 31 JULY 2024
Cash flows from operating activities
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Profit for the financial year
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Amortisation of intangible assets
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Depreciation of tangible assets
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Profit on disposal of tangible assets
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Loss on disposal of subsidiaries
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Decrease in amounts owed by groups
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Net cash generated from operating activities
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Cash flows from investing activities
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Purchase of intangible fixed assets
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Purchase of tangible fixed assets
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Sale of tangible fixed assets
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Net cash on disposal of subsidiaries
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|
|
Net cash from investing activities
|
|
|
|
MORNING FOODS, LIMITED
CONSOLIDATED STATEMENT OF CASH FLOWS (CONTINUED)
FOR THE YEAR ENDED 31 JULY 2024
|
|
|
Cash flows from financing activities
|
|
|
Purchase of ordinary shares
|
|
|
|
|
|
|
|
|
Net cash used in financing activities
|
|
|
Net increase in cash and cash equivalents
|
|
|
Cash and cash equivalents at beginning of year
|
|
|
Cash and cash equivalents at the end of year
|
|
|
|
|
|
Cash and cash equivalents at the end of year comprise:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
MORNING FOODS, LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 JULY 2024
Morning Foods, Limited ("the Company") is a private company limited by shares incorporated in England and Wales with registration number 00375854. The address of the registered office is North Western Mills, Gresty Road, Crewe, Cheshire, CW2 6HP.
The principal activity of the Company is grain milling and the manufacture of breakfast cereals and cereals-based food.
2.Accounting policies
|
|
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 Group management to exercise judgment in applying the Group's accounting policies (see note 3).
The Company has taken advantage of the exemption allowed under section 408 of the Companies Act 2006 and has not presented its own Statement of Comprehensive Income in these financial statements.
The following principal accounting policies have been applied:
The consolidated financial statements present the results of the Company and its own subsidiaries ("the Group") as if they form a single entity. Intercompany transactions and balances between group companies are therefore eliminated in full.
The consolidated financial statements incorporate the results of business combinations using the purchase method. In the Statement of Financial Position, the acquiree's identifiable assets, liabilities and contingent liabilities are initially recognised at their fair values at the acquisition date. The results of acquired operations are included in the Consolidated Statement of Comprehensive Income from the date on which control is obtained. They are deconsolidated from the date control ceases.
|
|
Financial reporting standard 102 - reduced disclosure exemptions
|
The Parent Company has taken advantage of the following disclosure exemptions in preparing these financial statements, as permitted by the FRS 102 "The Financial Reporting Standard applicable in the UK and Republic of Ireland":
• the requirements of Section 7 Statement of Cash Flows;
• the requirements of Section 12 Other Financial Instruments paragraphs 12.26 to 12.27, 12.29(a), 12.29(b) and 12.29A;
• the requirements of Section 33 Related Party Disclosures paragraph 33.7.
|
MORNING FOODS, LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 JULY 2024
2.Accounting policies (continued)
The Directors have produced an extended forecast, 'the forecast' for the period to 31 July 2026. These forecasts are monitored monthly by the Board against actual trading performance. The Directors continue to monitor the impact of world events on various commodity prices however the long-term outlook remains uncertain. The Directors have also considered the impact of supply chain issues and inflationary pressures.
The Directors are confident in the forecasts for the business in terms of ongoing demand, source of supply and productive ability and in the short and long term liquidity. The Directors are satisfied that a scenario that could result in the business not being a going concern are considered extremely remote.
After making enquiries and considering the matters described above for a period of more than 12 months post approval of the accounts, the Directors have a reasonable expectation that the Group and Company has adequate resources to continue in operational existence for the foreseeable future. For these reasons, they continue to adopt the going concern basis in preparing the Annual Report and financial statements.
|
|
Foreign currency translation
|
Functional and presentation currency
The Company's functional and presentational currency is GBP rounded to the nearest £1.
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.
Foreign exchange gains and losses resulting from the settlement of transactions and from the translation at period-end exchange rates of monetary assets and liabilities denominated in foreign currencies are recognised in profit or loss except when deferred in other comprehensive income as qualifying cash flow hedges.
Foreign exchange gains and losses that relate to borrowings and cash and cash equivalents are presented in the Consolidated Statement of Comprehensive Income within 'finance income or costs'. All other foreign exchange gains and losses are presented in profit or loss within 'other operating income'.
On consolidation, the results of overseas operations are translated into Sterling at rates approximating to those ruling when the transactions took place. All assets and liabilities of overseas operations are translated at the rate ruling at the reporting date. Exchange differences arising on translating the opening net assets at opening rate and the results of overseas operations at actual rate are recognised in other comprehensive income.
|
MORNING FOODS, LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 JULY 2024
2.Accounting policies (continued)
Revenue is recognised to the extent that it is probable that the economic benefits will flow to the Group and the revenue can be reliably measured. Revenue 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 revenue is recognised:
Sale of goods
Revenue from the sale of goods is recognised when all of the following conditions are satisfied:
∙the Group has transferred the significant risks and rewards of ownership to the buyer;
∙the Group retains neither continuing managerial involvement to the degree usually associated with ownership nor effective control over the goods sold;
∙the amount of revenue can be measured reliably;
∙it is probable that the Group 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.
Rendering of services
Revenue from a contract to provide services is recognised in the period in which the services are provided in accordance with the stage of completion of the contract when all of the following conditions are satisfied:
∙the amount of revenue can be measured reliably;
∙it is probable that the Group will receive the consideration due under the contract;
∙the stage of completion of the contract at the end of the reporting period can be measured reliably; and
∙the costs incurred and the costs to complete the contract can be measured reliably.
Interest income is recognised in profit or loss using the effective interest method.
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.
All borrowing costs are recognised in profit or loss in the year in which they are incurred.
|
MORNING FOODS, LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 JULY 2024
2.Accounting policies (continued)
Defined contribution pension plan
The Group operates a defined contribution plan for its employees. A defined contribution plan is a pension plan under which the Group pays fixed contributions into a separate entity. Once the contributions have been paid the Group 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 Group in independently administered funds.
|
|
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 income 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 and the Group operate and generate 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;
∙Any deferred tax balances are reversed if and when all conditions for retaining associated tax allowances have been met; and
∙Where they relate to timing differences in respect of interests in subsidiaries, associates, branches and joint ventures and the Group can control the reversal of the timing differences and such reversal is not considered probable in the foreseeable future.
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.
Intangible assets are initially recognised at cost. After recognition, under the cost model, intangible assets are measured at cost less any accumulated amortisation and any accumulated impairment losses.
All intangible assets are considered to have a finite useful life. If a reliable estimate of the useful life cannot be made, the useful life shall not exceed ten years.
|
MORNING FOODS, LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 JULY 2024
2.Accounting policies (continued)
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, on the following basis.
Depreciation is provided on the following basis:
|
|
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|
|
over 30 years straight line
|
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|
|
|
|
|
over 4 to 6 years straight line
|
|
|
|
|
|
|
over 4 years reducing balance
|
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.
Investments in subsidiaries are measured at cost less accumulated impairment.
Investments in unlisted Group shares, whose market value can be reliably determined, are remeasured to market value at each reporting date. Gains and losses on remeasurement are recognised in the Consolidated Statement of Comprehensive Income for the period. Where market value cannot be reliably determined, such investments are stated at historic cost less impairment.
Investments in listed company shares are remeasured to market value at each reporting date. Gains and losses on remeasurement are recognised in profit or loss for the period.
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.
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.
|
MORNING FOODS, LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 JULY 2024
2.Accounting policies (continued)
|
|
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 Consolidated 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 Group's cash management.
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.
|
|
Provisions for liabilities
|
Provisions are recognised when an event has taken place that gives rise to a legal or constructive obligation, a transfer of economic benefits is probable and a reliable estimate can be made.
Provisions are measured as the best estimate of the amount required to settle the obligation, taking into account the related risks and uncertainties.
Increases in provisions are generally charged as an expense to profit or loss.
The Group has elected to apply the provisions of Section 11 “Basic Financial Instruments” of FRS 102 to all of its financial instruments.
The Group 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 Group's Statement of Financial Position when the Group 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.
Basic financial assets
Basic financial assets, which include trade and other receivables, cash and bank balances, are initially measured at their transaction price including transaction costs and are subsequently carried at their amortised cost using the effective interest method, less any provision for impairment, 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.
Discounting is omitted where the effect of discounting is immaterial. The Group's cash and cash equivalents, trade and most other receivables due with the operating cycle fall into this category of financial instruments.
|
MORNING FOODS, LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 JULY 2024
2.Accounting policies (continued)
|
|
Financial instruments (continued)
|
Other financial assets
Other financial assets, which includes investments in equity instruments which are not classified as subsidiaries, associates or joint ventures, are initially measured at fair value, which is normally the recognised transaction price. Such assets are subsequently measured at fair value with the changes in fair value being recognised in the profit or loss. Where other financial assets are not publicly traded, hence their fair value cannot be measured reliably, they are measured at cost less impairment.
Impairment of financial assets
Financial assets are assessed for indicators of impairment at each reporting date.
Financial assets are impaired when events, subsequent to their initial recognition, indicate the estimated future cash flows derived from the financial asset(s) have been adversely impacted. The impairment loss will be the difference between the current carrying amount and the present value of the future cash flows at the asset(s) original effective interest rate.
If there is a favourable change in relation to the events surrounding the impairment loss then the impairment can be reviewed for possible reversal. The reversal will not cause the current carrying amount to exceed the original carrying amount had the impairment not been recognised. The impairment reversal is recognised in the profit or loss.
Financial liabilities
Financial liabilities and equity instruments are classified according to the substance of the contractual arrangements entered into. An equity instruments any contract that evidences a residual interest in the assets of the Group after the deduction of all its liabilities.
Basic financial liabilities, which include trade and other payables, bank loans, other loans and loans due to fellow group companies are initially measured at their transaction price after transaction costs. When this constitutes a financing transaction, whereby the debt instrument is measured at the present value of the future receipts discounted at a market rate of interest. Discounting is omitted where the effect of discounting is immaterial.
Debt instruments are subsequently carried at their amortised cost using the effective interest rate method.
Trade payables are obligations to pay for goods and services that have been acquired in the ordinary course of business from suppliers. Trade payables are classified as current liabilities if the payment is due within one year. If not, they represent non-current liabilities. Trade payables are initially recognised at their transaction price and subsequently are measured at amortised cost using the effective interest method. Discounting is omitted where the effect of discounting is immaterial.
|
MORNING FOODS, LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 JULY 2024
2.Accounting policies (continued)
|
|
Financial instruments (continued)
|
Derecognition of financial instruments
Derecognition of financial assets
Financial assets are derecognised when their contractual right to future cash flow expire, or are settled, or when the Group transfers the asset and substantially all the risks and rewards of ownership to another party. If significant risks and rewards of ownership are retained after the transfer to another party, then the Group will continue to recognise the value of the portion of the risks and rewards retained.
Derecognition of financial liabilities
Financial liabilities are derecognised when the Group's contractual obligations expire or are discharged or cancelled.
|
Judgments in applying accounting policies and key sources of estimation uncertainty
|
In the process of applying the Group's accounting policies, the Group is required to make certain judgements, estimates and assumptions that it believes are reasonable based on the information available. The significant judgements relate to the following:
Onerous contract provision
The calculation of the onerous contract provision is performed using published commodity information, and is based on the contracted tonnage of product to be sold at agreed prices. Whilst the calculation of the provision is largely supported by externally published prices, the cost of grain at the period end and the costs of production are the main judgement involved is the potential fluctuation in the prices of oats post the year end. The carrying amount of the onerous contract provision is included in note 23.
Useful lives of property, plant and equipment
Depreciation is provided so as to write down the assets to their residual values over their estimated useful lives as set out in the Company's accounting policy. The selection of these estimated lives requires the exercise of management judgement. Useful lives are regularly reviewed and should management's assessment of useful lives shorten then depreciation charges in the financial statements would increase and carrying amounts of property, plant and equipment would reduce accordingly. The carrying amount of property, plant and equipment by each class is included in note 14.
|
MORNING FOODS, LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 JULY 2024
Analysis of turnover by country of destination:
|
|
|
The operating profit is stated after charging/(crediting):
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|
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|
|
|
|
|
|
|
|
|
|
|
Depreciation of tangible fixed assets
|
|
|
|
Amortisation of intangible assets, including goodwill
|
|
|
|
Foreign exchange loss/(gain)
|
|
|
|
Profit on sale of fixed assets
|
|
|
|
Loss on disposal of subsidiaries
|
|
|
|
MORNING FOODS, LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 JULY 2024
|
|
|
During the year, the Group obtained the following services from the Company's auditor and its associates:
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|
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|
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Fees payable to the Company's auditor for the audit of the consolidated and parent Company's financial statements
|
|
|
|
Fees payable to the Company's auditor in respect of:
|
|
|
|
The auditing of accounts of subsidiaries of the Company
|
|
|
|
Taxation compliance services
|
|
|
|
Preparation of financial statements
|
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|
|
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|
|
|
|
Staff costs, including directors' remuneration, were as follows:
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|
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|
|
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|
|
|
|
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|
|
Cost of defined contribution scheme
|
|
|
|
|
|
|
|
|
|
|
|
The average monthly number of employees, including the directors, during the year was as follows:
|
|
MORNING FOODS, LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 JULY 2024
|
|
|
|
|
Group contributions to defined contribution pension schemes
|
|
|
|
|
|
|
|
|
|
|
|
During the year retirement benefits were accruing to 7 directors (2023 - 7) in respect of defined contribution pension schemes.
|
|
The highest paid director received remuneration of £289,681 (2023 - £279,006).
|
|
The value of the Group's contributions paid to a defined contribution pension scheme in respect of the highest paid director amounted to £4,000 (2023 - £4,000).
|
|
The Directors of the Company are considered to be the key management personnel. Their total remuneration inclusive of employer's national insurance is £3,021,258 (2023 - £2,240,447).
|
|
Other interest receivable
|
|
|
|
Interest payable and similar expenses
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
MORNING FOODS, LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 JULY 2024
|
|
|
|
|
Current tax on profits for the year
|
|
|
|
Adjustments in respect of previous periods
|
|
|
|
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|
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|
|
|
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|
|
|
Origination and reversal of timing differences
|
|
|
|
|
|
|
|
Adjustments to tax charge in respect of previous periods
|
|
|
|
|
|
|
|
MORNING FOODS, LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 JULY 2024
12.Taxation (continued)
|
Factors affecting tax charge for the year
|
|
The tax assessed for the year is higher than (2023 -higher than) the standard rate of corporation tax in the UK of 25% (2023 -21.01%). The differences are explained below:
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|
|
|
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|
|
|
|
|
|
Profit on ordinary activities before tax
|
|
|
|
Profit on ordinary activities multiplied by standard rate of corporation tax in the UK of 25% (2023 -21.01%)
|
|
|
|
|
|
|
|
|
|
|
|
Expenses not deductible for tax purposes
|
|
|
|
Additional deduction for land remediation expenditure
|
|
|
|
|
|
|
|
Impact of R&D tax credits
|
|
|
|
Remeasurement of deferred tax for changes in tax rates
|
|
|
|
Movement in deferred tax not recognised
|
|
|
|
Adjustments to tax charge in respect of prior periods
|
|
|
|
Adjustments to tax charge in respect of previous periods - deferred tax
|
|
|
|
Total tax charge for the year
|
|
|
|
Factors that may affect future tax charges
|
There were no factors that may affect future tax charges.
|
MORNING FOODS, LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 JULY 2024
|
MORNING FOODS, LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 JULY 2024
|
Included in freehold property is land at cost of £12,325,523 (2023 - £12,325,523), which is not depreciated.
|
|
MORNING FOODS, LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 JULY 2024
14.Tangible fixed assets (continued)
|
Included in freehold property is land at a cost of £11,277,216 (2023 - £11,277,216), which is not depreciated.
|
|
MORNING FOODS, LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 JULY 2024
|
|
|
Other fixed asset investments
|
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|
|
|
|
|
|
|
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|
|
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|
|
On disposal of subsidiaries
|
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|
|
Investments in subsidiary companies
|
Other fixed asset investments
|
|
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|
|
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|
MORNING FOODS, LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 JULY 2024
|
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|
The following were subsidiary undertakings of the Company:
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|
|
|
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|
|
North Western Mills, Gresty Road, Crewe, Cheshire, CW2 6HP
|
|
|
|
Organic Oat Company Limited
|
North Western Mills, Gresty Road, Crewe, Cheshire, CW2 6HP
|
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|
|
Floor 3, Block 3, Miesian Plaza, Dublin, D02 Y754
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|
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|
|
North Western Mills, Gresty Road, Crewe, Cheshire, CW2 6HP
|
|
|
|
Companies marked with * are indirect subsidiaries of Morning Foods Limited.
During the year the Company disposed of 100% of its holding in Buckley Foods Limited, Hamlyns of Scotland Limited, Walter Brown & Son Limited, Newport Silos Limited, Mornflake Energy Limited, 1675 Logistics Limited, New Morning Foods Limited, Grampian Oat Products Limited, OSO Natural Fuel Ltd and Mighty Oats Limited. These subsidiaries were disposed at cost, £249,392, for a share for share exchange to the new Holding company, Agri Food Holdings Limited.
|
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Raw materials and consumables
|
|
|
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|
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Finished goods and goods for resale
|
|
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|
|
|
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|
|
|
|
|
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|
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The difference between purchase price or production cost of stocks and their replacement cost is not material.
|
|
MORNING FOODS, LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 JULY 2024
|
Due after more than one year
|
|
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|
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Amounts owed by group undertakings
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Amounts owed by joint ventures and associated undertakings
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Prepayments and accrued income
|
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Trade debtors for the Group and Company are stated after a bad debt provision of £974,546 (£2023 - £814,067).
|
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Cash and cash equivalents
|
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|
|
|
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|
|
|
|
|
|
|
MORNING FOODS, LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 JULY 2024
|
Creditors: Amounts falling due within one year
|
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|
Other taxation and social security
|
|
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|
|
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Accruals and deferred income
|
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|
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The bank overdraft is secured by way of legal mortgages over the Group's freehold land.
|
|
Creditors: Amounts falling due after more than one year
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amounts owed to group undertakings
|
|
|
|
|
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|
|
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|
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Analysis of the maturity of loans is given below:
|
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|
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|
|
|
|
|
|
|
Amounts falling due within one year
|
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|
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|
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MORNING FOODS, LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 JULY 2024
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Charged to profit or loss
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On disposal of subsidiaries
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Charged to profit or loss
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The deferred tax asset is made up as follows:
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Fixed asset timing differences
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Short term timing differences
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MORNING FOODS, LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 JULY 2024
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Onerous contract provision
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The onerous contract provision represents the present obligation on contracts that the Group has with suppliers for the supply of goods as at the balance sheet date that are deemed to be onerous.
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Allotted, called up and fully paid
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24,623 (2023 - 24,623) Ordinary shares of £1.00 each
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MORNING FOODS, LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 JULY 2024
Capital redemption reserve
The capital redemption reserve represents the nominal value of shares which have been repurchased by the Parent Company.
Profit and loss account
This reserve represents cumulative profits and losses less any dividends declared.
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On disposal of subsidiaries
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Effect of disposal on financial position of the group
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During the year the Company disposed of 100% of its holding in Buckley Foods Limited, Hamlyns of Scotland Limited, Walter Brown & Son Limited, Newport Silos Limited, Mornflake Energy Limited, 1675 Logistics Limited, New Morning Foods Limited, Grampian Oat Products Limited, OSO Natural Fuel Ltd and Mighty Oats Limited. These subsidiaries were disposed at cost, £249,392, for a share for share exchange to the new Holding company, Agri Food Holdings Limited, resulting in a loss of £4,529,249 to the Group.
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Consideration received in cash
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Cash and cash equivalents disposed of
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MORNING FOODS, LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 JULY 2024
The Directors have reviewed the presentation and allocation of expenses in the current year. As part of this review, expenses included in cost of sales in the prior year were identified as relating to distribution costs and administrative expenses. This error has been corrected through retrospective restatement, as a result cost of sales have decreased by £21,126,910, distribution costs have increased by £17,864,619 and administrative expenses have increased by £3,262,291. There is no impact on the previously reported profit for the financial year or net assets.
The Group operates a defined contribution pension scheme, the assets of which are held separately from those of the Group in an independently administered fund. The pension cost charge for the year is £1,157,507 (2023 - £1,111,364). Contributions totalling £175,036 (2023 - £184,073) were payable to the fund at the balance sheet date and are included in other creditors.
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Related party transactions
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Sales to companies under common control
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Purchases from companies under common control
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Balance owed to these companies
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Balance owed by these companies
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During the year there were loans with related companies by virtue of common control, at the year end there was £8,985,814 (2023 - £3,650,000) due and the maximum amount outstanding during the year was £10,630,128 (2023 - £11,150,000). The loans represent a cash sweep treasury function to the related parties.
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In the opinion of the Directors, the Company and Group is controlled by J E Lea.
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