FOR THE YEAR ENDED 30 JUNE 2022
|
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
FRAMPTONS LIMITED
COMPANY INFORMATION
|
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
FRAMPTONS LIMITED
CONTENTS
|
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
FRAMPTONS LIMITED
STRATEGIC REPORT
FOR THE YEAR ENDED 30 JUNE 2022
The principal activities of the Company during the period remain the manufacture and sale of liquid and cooked egg products and the contract manufacture of other liquid food, beverage and juice products for brand owners. The directors do not envisage a change in the activities of the Company in the foreseeable future.
The results, compared with the previous year, can be summarised as follows:
∙A 36% increase in contract pack sales revenue.
∙A 21% increase in egg product sales revenue.
∙Resulting in a 33% increase in total sales revenues.
∙A 37% increase in gross margin earned, before distribution and administrative costs.
∙A 19% increase in distribution and administrative overheads.
∙A 43% reduction in the operating loss against that reported in 2021.
∙The Company is reporting a net loss before tax of £733k, an improvement on the previous year despite a significant increase in bank interest payable.
These results essentially reflect the challenges of recovery from COVID-19 impacts and the subsequent pressure on energy and commodity price rises resulting from the war in Ukraine. While every measure possible was taken to mitigate the impact of these cost rises, there is an inevitable delay in being able maintain margins and profitability. The results also reflect the increased debt burden the business was required to take on as a direct result of COVID-19 impacts.
During the financial year 2023 the directors and management have been working on the implementation of a business simplification strategy aimed at:
∙Greater utilisation of newer production capabilities
∙Shutdown and removal of older plant
∙Delisting of certain SKU’s with the aim of de-complexing and reduction of stocks
∙Focus on higher production run volumes resulting in reduced overhead costs.
While this strategy has taken some time to fully implement, against an ongoing backdrop of high inflationary pressures, the business has returned to profitability in the first quarter of FY2024.
Operational, commercial and financial risks are all considered in establishing and maintaining the Company’s control environment. The principle risks and uncertainties faced by the Company, in line with the rest of the food manufacturing sector, have been identified as: consumer, and therefore customer demand; competitor activity; pricing and availability of raw materials; liquidity and credit risks; production issues and external factors creating food safety issues; business continuity; recruitment and retention of key staff; health and safety.
While sales volumes for the year saw a recovery to pre-COVID levels the business has faced very significant cost increases in terms of material costs, energy costs, and wage inflation. While some of this cost has been recovered in increased selling prices, the prevailing trading environment has resulted in the trading loss being reported. The Company has a programme for continuous review of risk and also maintains an appropriate portfolio of insurance policies in line with the nature, size and complexity of the business.
Page 1
|
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
FRAMPTONS LIMITED
STRATEGIC REPORT (CONTINUED)
FOR THE YEAR ENDED 30 JUNE 2022
The Directors have determined that the following KPI’s are the most effective measure of progress towards achieving the objectives of the business. The current financial year is not considered to be reflective of normal operational performance due to ongoing impacts on operational costs, primarily labour and energy, as a result of COVD-19 and the war in Ukraine:
Sales growth - 2022: 33.2%; 2021: (6.3)%
Gross profit - 2022: 17.2%; 2021: 16.7% Operating profit - 2022: (0.01)%; 2021: (1.29)% EBITDA - 2022: £1.149m; 2021: £0.689m
The board of directors of the Company consider, both individually and together, that they have acted in a way they consider, in good faith, would be most likely to promote the success of the Company for the benefit of its members as a whole and having regard (amongst other matters) to factors (a) to (f) S172 Companies Act 2006, in the decisions taken during the year ended 30 June 2022. Specifically, the Board ensure in all decisions taken that:
∙Business is conducted morally and ethically, in line with the Company’s Code of Conduct
∙Short-term gains do not have an adverse consequence on the Company’s long-term strategy, success and benefits
∙Employee welfare, training and interests are taken care of
∙Customer and supplier relationships are strong, mutually beneficial and comply with Company’s policies (such as anti-briber and corruption, anti-slavery and human trafficking and corporate social responsibility)
∙Any community and environmental impacts as a result of the Company’s operations are considered
During the financial year, the Company:
∙The Company continued to invest in its infrastructure throughout the last financial year, notwithstanding significant financial pressures, in order to improve operational performance and customer experience for the longer term
∙Informally consulted with its employees to ensure its workspaces and working practices were compliant and safe.
This report was approved by the board and signed on its behalf..
Page 2
|
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
FRAMPTONS LIMITED
DIRECTORS' REPORT
FOR THE YEAR ENDED 30 JUNE 2022
The directors present their report and the financial statements for the year ended 30 June 2022.
The directors do not envisage a change in the activities of the Company in the foreseeable future.
The loss for the year, after taxation, amounted to £592,829 (2021: loss £758,677).
The directors who served during the year were:
Page 3
|
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
FRAMPTONS LIMITED
DIRECTORS' REPORT (CONTINUED)
FOR THE YEAR ENDED 30 JUNE 2022
The Directors assess whether the use of going concern is appropriate, i.e. whether there are any material uncertainties related to events or conditions that may cast significant doubt on the ability of the Company, and the group is is a member of, headed by Framptons Group Holdings Limited, to continue as a going concern. The Directors make this assessment in respect of a period of 12 months from the date of approval of the financial statements.
It is acknowledged that prior to the balance sheet date the Group and Company has been significantly impacted by the COVID-19 pandemic and the Ukraine war, which has had an unprecedented impact on a wide range of businesses, industries, and the economy as a whole. During the year ended 30 June 2022 the Group headed by Framptons Group Holdings Limited made a loss of £672,690 and as at 30 June 2022 had net current liabilities of £7,764,205 and net assets of £1,660,186. The financial results for the year ended 30 June 2023 will show continued trading losses and an increased net current liability position. The Group has been successful in raising an additional £1.9m in equity investment and short-term loans, as well as renewing its invoice discounting facility with HSBC, which have provided the necessary liquidity to continue trading. The Group is reliant on proceeds of factored debts which are secured against trade debtors, and a mortgage debenture over all the assets in the Group in favour of HSBC. The Group also has 2 bank loans from HSBC, one of which was received under the Coronavirus Business Interruption Loan Scheme (CBILS), managed by the British Business Bank, repayable in instalments, with the final payment due in 2027. The other loan is a term loan repayable in instalments, with the final payment due in 2026, however, due to a breach of a financial covenant attached to the facility the loan has been reclassified as repayable on demand. The Group has also breached these covenants at 30 June 2023. No formal waiver of enforcement action as a result of this breach has been obtained by the Directors, but the Directors are in discussions with HSBC regarding these breaches and are seeking assurances that existing facilities will continue to be made available. The outcome of these discussions is expected to be positive, but the conclusion remains uncertain. There has been an offer of significant investment into the business which the Directors believe will complete by the end of November 2023, however, the capital has not yet been received, and has therefore not been included the Directors budgets and forecasts. The Directors have prepared budgets and cash flow forecasts for a period of at least 12 months following the date of approval of the financial statements. These forecasts assume that the current improved trading performance of the group continues. The Directors are of the opinion that the Group will continue in operational existence for the foreseeable future and continue to adopt the going concern basis in preparing the financial statements. This opinion is based on the group’s current trading levels, and support from creditors, including HSBC. However, in making this assessment the directors have made a number of significant assumptions. These include:
∙Ongoing support from HSBC – no formal waiver of enforcement action as a result of financial covenant breaches have been obtained. The bank has been supportive of the business to date and the Directors assume this support will continue for at least 12 months from signing these financial statements, and to the Directors do not expect these banking facilities to be withdrawn within 12 months from approving these financial statements.
∙Return to profitability and cash generation – the Directors’ forecasts assume that the Group’s revenue and cost savings targets are achieved to enable the group to generate positive operating cash flows in order to meet its creditor obligations.
The directors believe that, taken as a whole, the factors described above enable the Group and the Company to continue as a going concern for the foreseeable future. The financial statements do not reflect the adjustments that would be necessary should the ability of the Group to trade be jeopardised due to a material issue with any one of these assumptions not being achieved. As such there is a material uncertainty related to events or conditions that may cast significant doubt on the group’s ability to continue as a going concern and, therefore,
Page 4
|
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
FRAMPTONS LIMITED
DIRECTORS' REPORT (CONTINUED)
FOR THE YEAR ENDED 30 JUNE 2022
that it may be unable to realise its assets and discharge its liabilities in the normal course of business.
The directors intend to continue the development of the company's principal activities.
The company places considerable value on the involvement of its employees and has continued to keep them informed on matters affecting them as employees an on various factors affecting performance of the Company. This is achieved through formal and informal meetings. Employee representatives are consulted regularly on a wide range of matters affecting their current and future interests.
The Company also places considerable value on the relationship it holds with suppliers, customers and other stakeholders.
Our customers are essential to our business and we aim to work openly and transparently in fostering long-term customer relationships. Our business decisions and priorities are based on a good understanding of our customers and their requirements. We hold regular meetings with most of our customers at all levels within the business including the supply chain and commercial teams. Directors are involved in many of these meetings as and when required. The Company recognises the key role many of our suppliers play in supporting our ability to meet our customer requirements. Company policies in terms of specification, quality and supplier practices are applied in our selection of suppliers. To this end we proactively manage key supplier relationships and hold regular meetings where possible to ensure expectations and requirements for both parties are met. Directors are involved where necessary and where regular market reviews are strategic to the Company and its customers. The Company aims to foster open and transparent dialogue with the regulatory and industry bodies relevant to the Company’s business operations and products it produces. This also applies in its relationship with other key stakeholders such as its bankers, other funders, and external advisors.
The Company has continued with investments aimed at improving energy efficiencies across its operations. The combined heat and power installation is now operational providing both power and electricity to the factory. The new biomass boiler is still to be commissioned and is expected to make a major contribution to reducing the Companies carbon footprint and cost of steam generation.
For the year ended 30 June 2022 the Company’s energy consumption (in MwH) and the CO2 equivalent emissions in tonnes (tCO2e) were:
Direct (gas, transport & liquid fuels) - 2022: 34,412 MwH / 6,714 tCO2e; 2021: 46,139 MwH / 8,454 tCO2e Indirect (purchased electricity) - 2022: 8,319 MwH / 1,766 tCO2e; 2021: 9,641 MwH / 2,047 tCO2e Indirect (employee owned cars) - 2022: 218 MwH / 0.05 tCO2e; 2021: 1,318 MwH / 0.3 tCO2e Intensity ratio - 2022: 0.11 ; 2021: 0.14
Page 5
|
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
FRAMPTONS LIMITED
DIRECTORS' REPORT (CONTINUED)
FOR THE YEAR ENDED 30 JUNE 2022
The Companies Act 2006 (Strategic Report and Directors' Report) Regulations 2013 requires a Strategic Report to be prepared. Where mandatory disclosures in the Directors' Report are considered by the directors to be of strategic importance, these are addressed in the Strategic Report.
There have been no significant events affecting the Company since the year end other than as outlined earlier in this report.
The auditors, Bishop Fleming Bath Limited, will be proposed for reappointment in accordance with section 485 of the Companies Act 2006.
This report was approved by the board and signed on its behalf.
Page 6
|
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
FRAMPTONS LIMITED
DIRECTORS' RESPONSIBILITIES STATEMENT
FOR THE YEAR ENDED 30 JUNE 2022
The directors are responsible for preparing the Strategic Report, the Directors' Report and the financial statements in accordance with applicable law and regulations.
Company law requires the directors to prepare financial statements for each financial year. Under that law the directors have elected to prepare the financial statements in accordance with applicable law and United Kingdom Accounting Standards (United Kingdom Generally Accepted Accounting Practice), including Financial Reporting Standard 102 ‘The Financial Reporting Standard applicable in the UK and Republic of Ireland'. Under company law the directors must not approve the financial statements unless they are satisfied that they give a true and fair view of the state of affairs of the Company and of the profit or loss of the Company for that period.
In preparing these financial statements, the directors are required to:
∙select suitable accounting policies for the Company's financial statements and then apply them consistently;
∙make judgments and accounting estimates that are reasonable and prudent;
∙prepare the financial statements on the going concern basis unless it is inappropriate to presume that the Company will continue in business.
The directors are responsible for keeping adequate accounting records that are sufficient to show and explain the Company's transactions and disclose with reasonable accuracy at any time the financial position of the Company and to enable them to ensure that the financial statements comply with the Companies Act 2006. They 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.
Page 7
|
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
FRAMPTONS LIMITED
INDEPENDENT AUDITORS' REPORT TO THE MEMBERS OF FRAMPTONS LIMITED
We have audited the financial statements of Framptons Limited (the 'Company') for the year ended 30 June 2022, which comprise the Statement of Comprehensive Income, the Statement of Financial Position, the Statement of Changes in Equity and the related notes, 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 Financial Reporting Standard 102 ‘The Financial Reporting Standard applicable in the UK and Republic of Ireland' (United Kingdom Generally Accepted Accounting Practice).
We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and applicable law. Our responsibilities under those standards are further described in the Auditors' responsibilities for the audit of the financial statements section of our report. We are independent of the Company in accordance with the ethical requirements that are relevant to our audit of the financial statements in the United Kingdom, including the Financial Reporting Council's Ethical Standard and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
We draw attention to note 2.4 in the financial statements, which indicates that the Group headed by Framptons Group Holdings Limited, has net current liabilities totalling £7,764,205 at 30 June 2022. The material uncertainty in relation to going concern centres around the Group's ability to recover to profitability and generate operating cash flows in order to meet its creditor obligations, and ongoing support from HSBC in relation to the breach of financial covenants on applicable to one of its loan instruments. As stated in note 2.4, these events or conditions, along with the other matters as set forth in note 2.4, indicate that a material uncertainty exists that may cast significant doubt on the Company's ability to continue as a going concern. Our opinion is not modified in respect of this matter.
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. Our evaluation of the directors' assessment of the Company's ability to continue to adopt the going concern basis of accounting included reviewing forecast performance and key inputs into the projections, and performing a reasonableness check on these assumptions. We have also reviewed board minutes, post year end financial information, and correspondence with HSBC.
Our responsibilities and the responsibilities of the directors with respect to going concern are described in the relevant sections of this report.
Page 8
|
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
FRAMPTONS LIMITED
INDEPENDENT AUDITORS' REPORT TO THE MEMBERS OF FRAMPTONS LIMITED (CONTINUED)
The other information comprises the information included in the Annual Report other than the financial statements and our Auditors' Report thereon. The directors are responsible for the other information contained within the Annual 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.
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.
In the light of the knowledge and understanding of the Company and its environment obtained in the course of the audit, we have not identified material misstatements in the Strategic Report or the Directors' Report.
Page 9
|
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
FRAMPTONS LIMITED
INDEPENDENT AUDITORS' REPORT TO THE MEMBERS OF FRAMPTONS LIMITED (CONTINUED)
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an Auditors' Report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with ISAs (UK) will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements.
Irregularities, including fraud, are instances of non-compliance with laws and regulations. We design procedures in line with our responsibilities, outlined above, to detect material misstatements in respect of irregularities, including fraud. The extent to which our procedures are capable of detecting irregularities, including fraud is detailed below:
∙We have considered the nature of the industry and sector, control environment, and business performance.
∙We have considered the results of enquiries with management and the directors in relation to their own identification and assessment of the risks of irregularities within the entity.
∙We have considered any matters we identified having obtained and reviewed the company’s documentation of their policies and procedures relating to:
°Identifying, evaluating and complying with laws and regulations and whether they were aware of any instances of non-compliance.
°Detecting and responding to the risks of fraud and whether they have knowledge of any actual, suspected or alleged fraud.
°The internal controls established to mitigate risks of fraud or non-compliance with laws and regulations.
∙We have considered the matters discussed among the audit engagement team regarding how and where fraud might occur in the financial statements and any potential indicators of fraud.
∙
As a result of these procedures, we have considered the opportunities and incentives that may exist within the organisation for fraud and identified the highest area of risk to be in relation to revenue recognition, with a particular risk in relation to year-end cut-off.
In common with all audits under ISAs (UK) we are also required to perform specific procedures to respond to the risk of management override.
We have also obtained an understanding of the legal and regulatory frameworks that the Company operates in, focusing on provisions of those laws and regulations that had a direct effect on the determination of material amounts and disclosures in the financial statements. The key laws and regulations we considered in this context included the UK Companies Act, FRS 102 and UK tax legislation.
In addition, we considered provisions of other laws and regulations that do not have a direct effect on the
financial statements but compliance with which may be fundamental to the Company’s ability to operate or avoid a material penalty. These included health and safety regulations and employment law.
Our procedures to respond to risks identified included the following:
∙Reviewing the financial statement disclosures and testing to supporting documentation to assess compliance with provisions of relevant laws and regulations described as having a direct effect on the financial statements.
∙Enquiring of management in relation to actual and potential claims or litigation.
∙Performing analytical procedures to identify unusual or unexpected relationships that may indicate risks of
∙material misstatement due to fraud.
∙Reviewing board meeting minutes.
∙Performing detailed testing in relation to the recognition of revenue with a particular focus around the year-end cut off.
∙Reviewing going concern assertions in detail and consideration of the existence of material uncertainties that are referred to in the financial statements and audit report.
∙In addressing the risk of fraud through management override of controls, testing the appropriateness of
Page 10
|
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
FRAMPTONS LIMITED
INDEPENDENT AUDITORS' REPORT TO THE MEMBERS OF FRAMPTONS LIMITED (CONTINUED)
journal entries and other adjustments; assessing whether the judgments made in accounting estimates are indicative of potential bias; and evaluating the business rationale of significant transactions that are unusual or outside the normal course of business.
We also communicated relevant identified laws and regulations and potential fraud risks to all engagement team members and remained alert to any indications of fraud or non-compliance with laws and regulations throughout the audit.
Our audit procedures were designed to respond to risks of material misstatement in the financial statements, recognising that the risk of not detecting a material misstatement due to fraud is higher than the risk of not detecting one resulting from an error, as fraud may involve deliberate concealment by, for example, forgery, misrepresentations or through collusion. There are inherent limitations in the audit procedures performed 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.
A further description of our responsibilities for the audit of the financial statements is located on the Financial Reporting Council's website at: www.frc.org.uk/auditorsresponsibilities. This description forms part of our Auditors' Report.
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 Auditors' Report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the Company and the Company's members, as a body, for our audit work, for this report, or for the opinions we have formed.
for and on behalf of
Chartered Accountants
Statutory Auditors
10 Temple Back
BS1 6FL
Page 11
|
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
FRAMPTONS LIMITED
STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEAR ENDED 30 JUNE 2022
Page 12
|
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
FRAMPTONS LIMITED
REGISTERED NUMBER:00927723
STATEMENT OF FINANCIAL POSITION
AS AT 30 JUNE 2022
The financial statements were approved and authorised for issue by the board and were signed on its behalf by:
The notes on pages 15 to 33 form part of these financial statements.
Page 13
|
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
FRAMPTONS LIMITED
STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 30 JUNE 2022
Page 14
|
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
FRAMPTONS LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2022
Framptons Limited is a limited liability company which is incorporated in England and Wales. The address of the registered office is 76 Charlton Road, Shepton Mallet, Somerset, BA4 5PD.
2.ACCOUNTING POLICIES
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 financial statements are prepared in sterling which is the functional currency of the company.
The preparation of financial statements in compliance with FRS 102 requires the use of certain critical accounting estimates. It also requires management to exercise judgment in applying the Company's accounting policies (see note 3).
The following principal accounting policies have been applied:
The 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 3 Financial Statement Presentation paragraph 3.17(d);
∙the requirements of Section 11 Financial Instruments paragraphs 11.42, 11.44 to 11.45, 11.47, 11.48(a)(iii), 11.48(a)(iv), 11.48(b) and 11.48(c);
∙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.
This information is included in the consolidated financial statements of Framptons Group Holdings Limited as at 30 June 2022 and these financial statements may be obtained from Companies House.
Page 15
|
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
FRAMPTONS LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2022
2.ACCOUNTING POLICIES (continued)
The Directors assess whether the use of going concern is appropriate, i.e. whether there are any material uncertainties related to events or conditions that may cast significant doubt on the ability of the Company, and the group it is a member of, headed by Framptons Group Holdings Limited, to continue as a going concern. The Directors make this assessment in respect of a period of 12 months from the date of approval of the financial statements.
It is acknowledged that prior to the balance sheet date the Group and Company has been significantly impacted by the COVID-19 pandemic and the Ukraine war, which has had an unprecedented impact on a wide range of businesses, industries, and the economy as a whole.
During the year ended 30 June 2022 the Group headed by Framptons Group Holdings Limited made a loss of £672,690 and as at 30 June 2022 had net current liabilities of £7,764,205 and net assets of £1,660,186. The financial results for the year ended 30 June 2023 will show continued trading losses and an increased net current liability position. The Group has been successful in raising an additional £1.9m in equity investment and short-term loans, as well as renewing its invoice discounting facility with HSBC, which have provided the necessary liquidity to continue trading.
The Group is reliant on proceeds of factored debts which are secured against trade debtors, and a mortgage debenture over all the assets in the Group in favour of HSBC. The Group also has 2 bank loans from HSBC, one of which was received under the Coronavirus Business Interruption Loan Scheme (CBILS), managed by the British Business Bank, repayable in instalments, with the final payment due in 2027. The other loan is a term loan repayable in instalments, with the final payment due in 2026, however, due to a breach of a financial covenant attached to the facility the loan has been reclassified as repayable on demand. The Group has also breached these covenants at 30 June 2023.
No formal waiver of enforcement action as a result of this breach has been obtained by the Directors, but the Directors are in discussions with HSBC regarding these breaches and are seeking assurances that existing facilities will continue to be made available. The outcome of these discussions is expected to be positive, but the conclusion remains uncertain.
There has been an offer of significant investment into the business which the Directors believe will complete by the end of November 2023, however, the capital has not yet been received, and has therefore not been included the Directors budgets and forecasts.
The Directors have prepared budgets and cash flow forecasts for a period of at least 12 months following the date of approval of the financial statements. These forecasts assume that the current improved trading performance of the group continues. The Directors are of the opinion that the Group will continue in operational existence for the foreseeable future and continue to adopt the going concern basis in preparing the financial statements. This opinion is based on the group’s current trading levels, and support from creditors, including HSBC. However, in making this assessment the directors have made a number of significant assumptions. These include:
∙Ongoing support from HSBC – no formal waiver of enforcement action as a result of financial covenant breaches have been obtained. The bank has been supportive of the business to date and the Directors assume this support will continue for at least 12 months from signing these financial statements, and to the Directors do not expect these banking facilities to be withdrawn within 12 months from approving these financial statements.
∙Return to profitability and cash generation – the Directors’ forecasts assume that the Group’s revenue and cost savings targets are achieved to enable the group to generate positive operating cash flows in order to meet its creditor obligations.
The directors believe that, taken as a whole, the factors described above enable the Group and the
Page 16
|
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
FRAMPTONS LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2022
2.ACCOUNTING POLICIES (continued)
Company to continue as a going concern for the foreseeable future. The financial statements do not reflect the adjustments that would be necessary should the ability of the Group to trade be jeopardised due to a material issue with any one of these assumptions not being achieved. As such there is a material uncertainty related to events or conditions that may cast significant doubt on the group’s ability to continue as a going concern and, therefore, that it may be unable to realise its assets and discharge its liabilities in the normal course of business.
Sale of goods
At each reporting date the Company assesses whether there is any indication of impairment. If such indication exists, the recoverable amount of the asset is determined which is the higher of its fair value less costs to sell and its value in use. An impairment loss is recognised where the carrying amount exceeds the recoverable amount.
The Company adds to the carrying amount of an item of fixed assets the cost of replacing part of such an item when that cost is incurred, if the replacement part is expected to provide incremental future benefits to the Company. The carrying amount of the replaced part is derecognised. Repairs and maintenance are charged to profit or loss during the period in which they are incurred.
Page 17
|
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
FRAMPTONS LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2022
2.ACCOUNTING POLICIES (continued)
Depreciation is charged so as to allocate the cost of assets less their residual value over their estimated useful lives, using the straight-line method.
The estimated useful lives range as follows:
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.
Office equipment has been included within plant and machinery on note 12.
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 the Statement of Comprehensive Income.
Page 18
|
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
FRAMPTONS LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2022
2.ACCOUNTING POLICIES (continued)
Grants of a revenue nature are recognised in the Statement of Comprehensive Income in the same period as the related expenditure.
Functional and presentation currency
Transactions and balances
Page 19
|
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
FRAMPTONS LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2022
2.ACCOUNTING POLICIES (continued)
Page 20
|
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
FRAMPTONS LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2022
2.ACCOUNTING POLICIES (continued)
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 Statement of Financial Position when the Company becomes party to the contractual provisions of the instrument.
Financial assets and liabilities are offset, with the net amounts presented in the financial statements, when there is a legally enforceable right to set off the recognised amounts and there is an intention to settle on a net basis or to realise the asset and settle the liability simultaneously.
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 Company's cash and cash equivalents, trade and most other receivables due with the operating cycle fall into this category of financial instruments.
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 Company after the deduction of all its liabilities.
Page 21
|
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
FRAMPTONS LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2022
2.ACCOUNTING POLICIES (continued)
Basic financial liabilities, which include trade and other payables, bank loans and other loans 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.
Derecognition of financial assets
Financial assets are derecognised when their contractual right to future cash flow expire, or are settled, or when the Company 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 Company 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 Company's contractual obligations expire or are discharged or cancelled.
Page 22
|
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
FRAMPTONS LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2022
Accrued Income Certain customers of Framptons Limited are invoiced in arrears on a weekly basis. These invoices are in relation to multiple deliveries made that week. As a result, management have deemed it reasonable to recognise a percentage of these invoices at the year end based upon the number of days that related to this financial year. Stock Provision Management have considered slow moving reports, expiry reports and expected future custom in relation to the year end stock listing. As a result, management have deemed it reasonable to recognise a provision against the stock value held at the year end. Overhead Absorption Management have reviewed the processes involved in manufacturing the finished goods stock and have made their best estimate in attributing overhead costs such as electricity, freezing and staff time. Dilapidations Management have considered the cost of returning the leasehold property back to its original condition on expiry of the leases. The value recognised in the accounts is management's best estimate based upon available information.
The whole of the turnover is attributable to the principal activity of the company.
Page 23
|
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
FRAMPTONS LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2022
Page 24
|
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
FRAMPTONS LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2022
Page 25
|
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
FRAMPTONS LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2022
10.TAXATION (CONTINUED)
As enacted by the Government on 24 May 2021, the main rate of corporation tax will increase from 19% to 25% with effect from 1 April 2023.
Page 26
|
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
FRAMPTONS LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2022
Page 27
|
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
FRAMPTONS LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2022
Page 28
|
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
FRAMPTONS LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2022
Page 29
|
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
FRAMPTONS LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2022
Page 30
|
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
FRAMPTONS LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2022
Page 31
|
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
FRAMPTONS LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2022
Capital redemption reserve
Profit and loss account
The company operates a defined contributions pension scheme. The assets of the scheme are held separately from those of the company in an independently administered fund. The pension cost charge represents contributions payable by the company to the fund and amounted to £226,404 (2021: £198,150). Contributions totalling £46,884 (2021: £43,128) were payable to the fund at the reporting date.
Page 32
|
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
FRAMPTONS LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2022
The ultimate parent company is Framptons Group Holdings Limited, a company registered in England and Wales.
Page 33
|