Orkney Cheese Company Limited

	Page
Balance Sheet	1—2
Notes to the Financial Statements	3—9

1. General Information

Orkney Cheese Company Limited is a private company, limited by shares, incorporated in Scotland, registered number SC196090 . The registered office is Crowness Road, Hatston Industrial Estate, Kirkwall, Orkney, KW15 1RG.

2. Accounting Policies

2.1. Basis of Preparation of Financial Statements

The financial statements have been prepared under the historical cost convention and in accordance with Financial Reporting Standard 102 section 1A Small Entities "The Financial Reporting Standard applicable in the UK and Republic of Ireland" and the Companies Act 2006.

The presentation currency of the financial statements is the Pound Sterling (£).

2.2. Turnover

Turnover is measured at the fair value of the consideration received or receivable, net of discounts and value added taxes. Turnover includes revenue earned from the sale of goods. Turnover is reduced for estimated customer returns, rebates and other similar allowances.

Sale of goods

Turnover from the sale of goods is recognised when the significant risks and rewards of ownership of the goods has transferred to the buyer. This is usually at the point that the customer has signed for the delivery of the goods.

2.3. Tangible Fixed Assets and Depreciation

Tangible fixed assets are measured at cost less accumulated depreciation and any accumulated impairment losses. Depreciation is provided at rates calculated to write off the cost of the fixed assets, less their estimated residual value, over their expected useful lives on the following bases:

Freehold	4% on cost
Leasehold	in accordance with the lease.
Plant & Machinery	10% reducing balance
Motor Vehicles	10% reducing balance
Fixtures & Fittings	20% reducing balance
Computer Equipment	25% on cost

2.4. Leasing and Hire Purchase Contracts

Assets obtained under finance leases are capitalised as tangible fixed assets. Assets acquired under finance leases are depreciated over the shorter of the lease term and their useful lives. Assets acquired under hire purchase contracts are depreciated over their useful lives. Finance leases are those where substantially all of the benefits and risks of ownership are assumed by the company. Obligations under such agreements are included in the creditors net of the finance charge allocated to future periods. The finance element of the rental payment is charged to the profit and loss account so as to produce a constant periodic rate of charge on the net obligation outstanding in each period.

Rentals applicable to operating leases where substantially all of the benefits and risks of ownership remain with the lessor are charged to the profit and loss account as incurred.

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Orkney Cheese Company Limited

Notes to the Financial Statements (continued)

For The Year Ended 31 March 2025

2.5. Stocks and Work in Progress

Stocks are stated at the lower of cost and net realisable value on a consistent basis year by year. The cost of finished goods includes production overheads together with an appropriate proportion of indirect overheads. Net realisable value is calculated as the estimated selling price less costs to complete and sell.

At the end of each reporting period inventories are assessed for impairment. If an item of stock is impaired, the identified stock is reduced to its selling price less costs to complete and sell and an impairment charge is recognised in the profit and loss account. Where a reversal of the impairment is recognised the impairment charge is reversed, up to the original impairment loss, and is recognised as a credit in the profit and loss account.

2.6. Financial Instruments

The company has elected to apply the provisions of Section 11 'Basic Financial Instruments' of FRS 102 to all of its financial instruments.

Financial instruments are recognised in the company's balance sheet when the company becomes party to the contractual provisions of the instrument.

Financial assets and liabilities are offset, with the net amounts presented in the financial statements, when there is a legally enforceable right to set off the recognised amounts and there is an intention to settle on a net basis or to realise the asset and settle the liability simultaneously.

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 future receipts discounted at a market rate of interest. Financial assets classified as receivable within one year are not amortised.

Classification of financial liabilities

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.

Basic financial liabilities

Basic financial liabilities, including creditors re 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.

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Orkney Cheese Company Limited

Notes to the Financial Statements (continued)

For The Year Ended 31 March 2025

2.7. Taxation

Income tax expense represents the sum of the tax currently payable and deferred tax.

The tax currently payable is based on taxable profit for the year. Taxable profit differs from profit as reported in the statement of comprehensive income because of items of income or expense that are taxable or deductible in other years and items that are never taxable or deductible. The company's liability for current tax is calculated using tax rates that have been enacted or substantively enacted by the end of the reporting period.

Deferred tax is recognised on timing differences between the carrying amounts of assets and liabilities in the financial statements and the corresponding tax bases used in the computation of taxable profit. Deferred tax liabilities are generally recognised for all taxable timing differences. Deferred tax assets are generally recognised for all deductible temporary differences to the extent that it is probable that taxable profits will be available against which those deductible timing differences can be utilised. The carrying amount of deferred tax assets is reviewed at the end of each reporting period and reduced to the extent that it is no longer probable that sufficient taxable profits will be available to allow all or part of the asset to be recovered.

Deferred tax assets and liabilities are measured at the tax rates that are expected to apply in the period in which the liability is settled or the asset realised, based on tax rates (and tax laws) that have been enacted or substantively enacted by the end of the reporting period. Deferred tax liabilities are presented within provisions for liabilities and deferred tax assets within debtors. The measurement of deferred tax liabilities and assets reflect the tax consequences that would follow from the manner in which the Company expects, at the end of the reporting period, to recover or settle the carrying amount of its assets and liabilities.

Current and deferred tax are recognised in profit or loss for the year, except when they relate to items that are recognised in other comprehensive income or directly in equity, in which case current and deferred tax are recognised in other comprehensive income or directly in equity respectively.

2.8. Pensions

The company operates a defined pension contribution scheme. Contributions are charged to the profit and loss account as they become payable in accordance with the rules of the scheme.

2.9. Government Grant

Government grants are recognised in the profit and loss account in an appropriate manner that matches them with the expenditure towards which they are intended to contribute.

Grants for immediate financial support or to cover costs already incurred are recognised immediately in the profit and loss account. Grants towards general activities of the entity over a specific period are recognised in the profit and loss account over that period.

Grants towards fixed assets are recognised over the expected useful lives of the related assets and are treated as deferred income and released to the profit and loss account over the useful life of the asset concerned.

All grants in the profit and loss account are recognised when all conditions for receipt have been complied with.

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Orkney Cheese Company Limited

Notes to the Financial Statements (continued)

For The Year Ended 31 March 2025

2.10. Impairment of non-financial assets

At each reporting period date, the company reviews the carrying amounts of its tangible and intangible assets to determine whether there is any indication that those assets may have suffered an impairment loss. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment loss (if any). Where it is not possible to estimate the recoverable amount of an individual asset, the company estimates the recoverable amount of the cash-generating unit to which the asset belongs.

At each balance sheet date, the company reviews the carrying amounts of its tangible and intangible assets to determine whether there is any indication that those assets may have suffered an impairment loss. If there is such an indication the recoverable amount of the asset (or asset's cash generating unit) is compared to the carrying amount of the asset (or asset's cash generating unit).

The recoverable amount of the asset (or asset's cash generating unit) is the higher of the fair value less costs to sell and value in use. Value in use is defined as the present value of the future cash flows before interest and tax obtainable as a result of the asset's (or asset's cash generating unit's) continued use. These cash flows are discounted using a pre-tax discount rate that represents the current market risk-free rate and the risks inherent in the asset.

If the recoverable amount of the asset (or asset's cash generating unit) is estimated to be lower than the carrying amount, the carrying amount is reduced to its recoverable amount. An impairment loss is recognised in the profit and loss account, unless the asset has been revalued when the amount is recognised in other comprehensive income to the extent of any previously recognised revaluation.

Thereafter any excess is recognised in profit or loss.

If an impairment loss is subsequently reversed, the carrying amount of the asset (or asset's cash generating unit) is increased to the revised estimate of its recoverable amount, but only to the extent that the revised carrying amount does not exceed the carrying amount that would have been determined (net of depreciation or amortisation) had no impairment loss been recognised in prior periods. A reversal of an impairment loss is recognised in the profit and loss account.

3. Average Number of Employees

Average number of employees, including directors, during the year was: 23 (2024: 23)

4. Tangible Assets

	Land & Property
	Freehold	Leasehold	Plant & Machinery	Motor Vehicles
	£	£	£	£
Cost
As at 1 April 2024	42,699	13,181	2,970,534	120,888
Additions	-	-	55,270	-

As at 31 March 2025	42,699	13,181	3,025,804	120,888

Depreciation
As at 1 April 2024	29,751	13,181	1,731,791	108,216
Provided during the period	1,708	-	129,424	1,351

As at 31 March 2025	31,459	13,181	1,861,215	109,567

Net Book Value
As at 31 March 2025	11,240	-	1,164,589	11,321

As at 1 April 2024	12,948	-	1,238,743	12,672

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Orkney Cheese Company Limited

Notes to the Financial Statements (continued)

For The Year Ended 31 March 2025


	Computer Equipment	Total
	£	£
Cost
As at 1 April 2024	39,786	3,187,088
Additions	1,480	56,750

As at 31 March 2025	41,266	3,243,838

Depreciation
As at 1 April 2024	33,831	1,916,770
Provided during the period	1,300	133,783

As at 31 March 2025	35,131	2,050,553

Net Book Value
As at 31 March 2025	6,135	1,193,285

As at 1 April 2024	5,955	1,270,318

5. Investments

	Unlisted
	£
Cost
As at 1 April 2024	75

As at 31 March 2025	75

Provision
As at 1 April 2024	-

As at 31 March 2025	-

Net Book Value
As at 31 March 2025	75

As at 1 April 2024	75

6. Stocks

	2025	2024
	£	£
Stock	2,391,887	2,645,555
Consumables	102,689	110,971

	2,494,576	2,756,526

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Orkney Cheese Company Limited

Notes to the Financial Statements (continued)

For The Year Ended 31 March 2025

7. Debtors

	2025	2024
	£	£
Due within one year
Trade debtors	1,266,734	974,624
Other debtors	40,005	47,435

	1,306,739	1,022,059

8. Creditors: Amounts Falling Due Within One Year

	2025	2024
	£	£
Trade creditors	80,464	81,838
Orkney Islands Council Reserve Fund Loan	72,000	-
Other taxes and social security	17,205	14,847
Net wages	30,143	28,180
Other creditors	151,419	172,527
Accruals and deferred income	40,133	74,908
Amounts owed to parent undertaking	565,040	586,392

	956,404	958,692

9. Creditors: Amounts Falling Due After More Than One Year

	2025	2024
	£	£
Orkney Islands Council	38,721	116,721
Deferred Government grants	361,910	403,763

	400,631	520,484

10. Secured Creditors

Of the creditors the following amounts are secured.

The loans from Orkney Islands Council are secured by a Standard Security over the assets of the company.

	2025		2024
	£		£
Other Creditors	110,721		116,721

11. Share Capital

	2025	2024
	£	£
Allotted, Called up and fully paid	1,000,000	1,000,000

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Orkney Cheese Company Limited

Notes to the Financial Statements (continued)

For The Year Ended 31 March 2025

12. Other Commitments

The total of future minimum lease payments under non-cancellable operating leases are as following:

	2025	2024
	£	£
Not later than one year	36,376	23,856
Later than one year and not later than five years	57,769	2,870

	94,145	26,726

13. Related Party Transactions

Lactalis McLelland Ltd
An associated company holding 20% of the share capital.
Sales totalling £5,774,997 were made during the year.
	2025	2024
	£	£
Amount due from related party at the balance sheet date	951,855	611,675


Orkney Milk Limited
Parent company holding 70% of share capital.
Sales totalling £132,011 were made during the year.
Purchases of milk totalling £4,782,109 were received during the year.
	2025	2024
	£	£
Amount due to related party at the balance sheet date	565,040	586,392

14. FRC's Ethical Standard - Provision Available for Small Entities

In common with other businesses of our size and nature we use our auditors to prepare and submit returns to the tax authorities and assist with the preparation of the financial statements.

15. Audit Information

The auditor's report on the accounts of Orkney Cheese Company Limited for the year ended 31 March 2025 was unqualified.

The auditor's report was signed by Steven Sinclair BA CA (Senior Statutory Auditor) for and on behalf of Orcadia, Chartered Accountants , Statutory Auditor.

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		2025		2024
	Notes	£	£	£	£
FIXED ASSETS
Tangible Assets	4		1,193,285		1,270,318
Investments	5		75		75

			1,193,360		1,270,393
CURRENT ASSETS
Stocks	6	2,494,576		2,756,526
Debtors	7	1,306,739		1,022,059
Cash at bank and in hand		1,214,262		1,230,669

		5,015,577		5,009,254
Creditors: Amounts Falling Due Within One Year	8	(956,404 )		(958,692 )

NET CURRENT ASSETS (LIABILITIES)			4,059,173		4,050,562

TOTAL ASSETS LESS CURRENT LIABILITIES			5,252,533		5,320,955

Creditors: Amounts Falling Due After More Than One Year	9		(400,631 )		(520,484 )

PROVISIONS FOR LIABILITIES
Deferred Taxation			(87,660 )		(87,660 )

NET ASSETS			4,764,242		4,712,811

CAPITAL AND RESERVES
Called up share capital	11		1,000,000		1,000,000
Share premium account			1,098,306		1,098,306
Profit and Loss Account			2,665,936		2,614,505

SHAREHOLDERS' FUNDS			4,764,242		4,712,811