The directors present the strategic report for Sunridge JDM I Limited (the 'Company') along with its subsidiaries (the 'Group') being Sunridge JDM II Limited, JDM Food Holdings Limited, JDM 2010 Limited and JDM Food Group Limited.
The principal activity of the Group is the manufacture and supply of food products.
2022 saw a year of stabilisation for the business being the first financial year of the last three not to be disrupted by pandemic-related lockdowns. For JDM this meant a small decrease in revenues with wholehead volumes into retail normalising post-pandemic, following a sustained period of consumers cooking and eating at home over the prior two financial periods. However, the directors are pleased to report underlying growth in each of our value-added channels which offset this and improved the business’ position entering 2023. In Q4 2022 we entered the Food Service sector for the first time, opening a new avenue of growth and potential for the business, and we expect significant growth in this channel, alongside our existing portfolio, over the course of 2023.
Following the acquisition of the business in mid-2021, significant capex investment into our site continued in 2022, further enhancing our capacity and capabilities to drive the business’ future growth.
In the second half of the year the Company was impacted by significant inflation in raw material and energy costs stemming from the conflict in Ukraine. Whilst the business took action to manage and mitigate input cost pressures to the extent possible, the sustained and significant nature of cost increases the business was subjected to resulted in selling price increases being passed onto our customers where essential to preserve the economic viability of lines supplied.
We enter 2023 on a strong financial footing and with positive momentum, having successfully navigated the macroeconomic challenges that 2022 presented. We expect to continue delivering sustained growth throughout 2023 and beyond by further developing existing and new customer relationships. We have built a talented commercial and culinary innovation team to collaborate with these customers, and have continued to make significant investment in building out additional manufacturing capacity and structure to underpin our growth.
The principal risks facing the Group can broadly be classified as financial. The directors have measures in place in order to mitigate such risks, which have proven to be effective.
Credit risk – Tight credit control procedures have meant that bad debts are generally minimal. A credit insurance policy is in place to mitigate risk in this area.
Liquidity risk – Liquidity needs to be maintained in order to assist the Group's working capital. The time lag between the purchase of stock and the receipt of cash from customers could potentially pose a threat to the continued trade. A stock loan facility is in place from our bankers, in order to mitigate this area of risk.
Interest rate risk – The interest charged on the Group's banking facilities is monitored on a regular basis and the rate negotiated where necessary in order to minimise the interest payable.
Foreign exchange rate risk – The Group undertakes transactions in foreign currencies. With the recent volatility of the British Pound, there is a risk of incurring losses on exchange. Procedures are in place to try and minimise this risk which include hedging and matching the currency of receipts and payments.
Price risk – the Group continues to monitor and manage the impact from the current cost of living crisis within the economy. The Group has been successful in negotiating price increases with customers where required.
The financial statements reflect the performance for the year, showing the Key Performance Indicators ‘KPIs’ being; Turnover, Gross Profit margin and adjusted EBITDA margin.
The comparative figures in these financial statements reflect the performance of the group subsequent to 7 June 2021, the date on which the Company acquired JDM 2010 Limited and its subsidiary, JDM Food Group Limited. The comparative figures included in computing key performance indicators below reflect the overall performance of the Group had it been incorporated for the full year, in order to provide a meaningful comparison.
The directors also reviewed gross and net profit as other Key Performance Indicators for the Group which is shown below:
| 2022 | 2021 |
Turnover | £60,431,778 | £62,119,860 |
Gross profit margin | 23.0% | 22.5% |
Adjusted EBITDA margin | 7.1% | 7.8% |
The Company's primary non-financial key performance indicator is carbon emissions per delivery, with the former representing the total of scope 1 and scope 2 emissions of CO2 equivalents, as follows:
| 2022 | 2021 |
Total energy usage (kWh) | 8,881,086 | 8,880,373 |
Total scope 1 and 2 emissions (tCO2e) | 1,655.9 | 1,567.4 |
Intensity metric (tCO2e) | 0.059 | 0.059 |
Under the Companies Act 2006, directors have seven general duties to the Group. One of these duties, commonly referred to as the ‘s172 duty’, is ‘to promote the success of the group’. Part 1 of that duty requires directors to do so ‘for the benefit of its members as a whole’, and in doing so, to have regard to the following six factors:
The likely consequences of any decisions in the long term
We engage with our investors on a regular basis to share our vision and strategy. The Group is fortunate to be backed by investors with a deep understanding of the sector in which we operate and believe in building long-term, successful and innovative partnerships. As part of this we:
Have regular ongoing dialogue between the CEO and Finance Director with our investors to update on developments, market conditions, growth opportunities and any other relevant factors
Hold monthly review calls to review financial performance, address any questions or concerns raised, and discuss collaboratively opportunities to advance the business and drive sustainable, profitable growth
Maintain and regularly update a long term financial planning model so the longer term impact of growth and changes in the business’ cost base and/or revenue profile are understood
The interests of the Group's employees
Our people are the Group's greatest asset. We strive to be an employer of choice, and to support this over the last 12 months we have:
Launched our ‘EPIC’ value set, which align Group goals across our workforce by integrating into objectives and annual appraisals. Individuals nominate colleagues for recognition as part of our quarterly EPIC awards and we celebrate the achievements of our people at an annual staff event
Supported employees through the cost of living crisis with vouchers, recipe meal kit boxes, and bringing forward our annual pay review
Made record investment into the training of our people to upskill our workforce and provide development and career progression opportunities
Relaunched our employee forum and held quarterly all-employee briefings to enhance lines of communication with our workforce, better understand key issues affecting our people and obtain feedback on proposed strategies to aid our decision-making and ensure that actions taken are done so in consultation with our people
The need to foster the Group's business relationships with suppliers, customers and others
We believe in engaging and transacting with our customers and suppliers in a transparent and ethical manner. This is an ongoing process as part of which we have:
Ensured technically-approved, high quality contingency suppliers are in place for continuity of supply to ensure a robust supply chain and maintain high service levels with our customers
Continued investment in our factory to create additional capacity and capability, alongside significant investment in enhancing our commercial and NPD team to enhance our customers’ experience and support them with product innovation
Adopted a partnership approach to each business relationship, understanding our customer’s needs intimately and aiming to develop a mutually beneficial, long-term relationship
The impact of the Group’s operations on the community and the environment
We are mindful of the impact we make on the environment and our local community. In the last 12 months we have:
Engaged with an emission data management company to accurately measure our carbon footprint baseline and set meaningful climate objectives
Launched an electric car salary sacrifice scheme to support our grey fleet’s transition to zero emissions vehicles
Sponsored multiple grass roots sport teams and supported the ‘Boston Beagle’ Greenpower racing team at Boston High School – promoting female participation in STEM subjects
Supported multiple community events/festivals in the local area
Held a gift collection for Boston Women’s Aid, ensuring a brighter Christmas for mothers and children fleeing domestic abuse
The reputation for a high standard of business conduct
JDM uphold the highest technical standards and refuse to compromise on quality. In the past 12 months we have:
Maintained our AA+ BRC certification, demonstrating our commitment to quality
Introduced daily taste panels to ensure consistency and quality of product
Ensured that our EPIC values underpin and promote our strong quality and safety culture, and a commitment to doing things the right way
Completed multiple customer audits and worked with collaboratively with them to maximise quality standards
The need to act fairly as between members of the company
We have identified the following member groups as relevant stakeholders of the Group: our people, our customers, our suppliers, our investors, and our local community. Positive engagement with all of these parties is key to our successful delivery of our strategy to be a trusted partner of choice, delivering the highest standards of service, innovation, quality and safety in an ethical, sustainable and profitable manner. We have set out above some of the ways in which we have and continue to engage with these stakeholders. We aim to ensure that their respective views are factored into our decision-making processes, seeking to balance interests, promote and maximise value for all parties in both the immediate and longer term.
On behalf of the board
The directors present their annual report and financial statements for the year ended 31 December 2022.
The results for the year are set out on page 13.
No ordinary dividends were paid (2021: £nil). The directors do not recommend payment of a final dividend (2021: £nil).
The directors who held office during the year and up to the date of signature of the financial statements were as follows:
As at 31 December 2022 the Group was engaged in research and development in the product development of exciting on-trend and new dishes to customer specifications.
The Group's policy is to consult and discuss with employees, through staff forums, briefings and at meetings, matters likely to affect employees' interests.
Information about matters of concern to employees is given through information bulletins and reports which seek to achieve a common awareness on the part of all employees of the financial and economic factors affecting the group's performance.
There is no employee share scheme at present, but the directors are considering the introduction of such a scheme as a means of further encouraging the involvement of employees in the Group's performance.
The Group values communication between management and employees on all matters affecting the welfare of its business. Regular management meetings are held between the local management and employees to allow a free flow of information and ideas.
The Group is committed to engaging with their principal stakeholders and views its suppliers, customers and employees as its principal stakeholders. All concerns or thoughts of our stakeholders are discussed at Board level and by direct engagement with stakeholders themselves. Every decision we make is taken with our stakeholders in mind and what is the best for the relationship in the long term. The customers’ opinions and feedback are taken into consideration when discussing strategy and performance.
Relationships with suppliers are also maintained as a partnership in order to work effectively and efficiently.
On 24 July 2023, the owners of the Sunridge JDM 1 Limited completed an acquisition and as a result, the company’s immediate and ultimate parent undertaking became Jardins and Broch Inc, a company incorporated in the USA.
The Group continues to invest in both production capacity and capability, which is creating significant added value opportunities.
The Group has the full support of its investors, as well as bankers HSBC.
Saffery LLP have expressed their willingness to continue in office.
As a large undertaking, the Group is required under the Streamlined Energy and Carbon Reporting (SECR) regulations to report on its global energy use and greenhouse gas emissions.
The data has been prepared using the GHG Reporting Protocol – Corporate Standard methodology, taking best available data and estimates when required. The reporting is based on the principles of relevance, completeness, consistency, transparent and accuracy.
The reporting meets the standard requirements for SECR; no voluntary emission sources have been reported for the year.
We have audited the financial statements of Sunridge JDM I Limited (the 'parent company') and its subsidiaries (the 'group') for the year ended 31 December 2022 which comprise the group statement of comprehensive income, the group statement of financial position, the company statement of financial position, the group statement of changes in equity, the company statement of changes in equity, the group statement of cash flows and notes to the financial statements, including significant accounting policies. The financial reporting framework that has been applied in their preparation is applicable law and United Kingdom Accounting Standards, including Financial Reporting Standard 102 The Financial Reporting Standard applicable in the UK and Republic of Ireland (United Kingdom Generally Accepted Accounting Practice).
Basis for opinion
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 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 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 directors are responsible for the other information. The other information comprises the information included in the annual report other than the financial statements and our auditor's report thereon. 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.
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.
In the light of the knowledge and understanding of the group and the 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.
As explained more fully in the directors' responsibilities statement, the directors are responsible for the preparation of the financial statements and for being satisfied that they give a true and fair view, and for such internal control as the directors determine is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error. In preparing the financial statements, the directors are responsible for assessing the 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 either intend to liquidate the parent company or to cease operations, or have no realistic alternative but to do so.
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.
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 specific procedures for this engagement and the extent to which these are capable of detecting irregularities, including fraud are detailed below.
Identifying and assessing risks related to irregularities:
We assessed the susceptibility of the group and parent company’s financial statements to material misstatement and how fraud might occur, including through discussions with the directors, discussions within our audit team planning meeting, updating our record of internal controls and ensuring these controls operated as intended. We evaluated possible incentives and opportunities for fraudulent manipulation of the financial statements. We identified laws and regulations that are of significance in the context of the group and parent company by discussions with directors and by updating our understanding of the sector in which the group and parent company operates.
Laws and regulations of direct significance in the context of the group and parent company include The Companies Act 2006 and UK Tax legislation.
Audit response to risks identified:
We considered the extent of compliance with these laws and regulations as part of our audit procedures on the related financial statement items including a review of group and parent company financial statement disclosures. We reviewed the parent company's records of breaches of laws and regulations, minutes of meetings and correspondence with relevant authorities to identify potential material misstatements arising. We discussed the parent company's policies and procedures for compliance with laws and regulations with members of management responsible for compliance.
During the planning meeting with the audit team, the engagement partner drew attention to the key areas which might involve non-compliance with laws and regulations or fraud. We enquired of management whether they were aware of any instances of non-compliance with laws and regulations or knowledge of any actual, suspected or alleged fraud. We addressed the risk of fraud through management override of controls by testing the appropriateness of journal entries and identifying any significant transactions that were unusual or outside the normal course of business. We assessed whether judgements made in making accounting estimates gave rise to a possible indication of management bias. At the completion stage of the audit, the engagement partner’s review included ensuring that the team had approached their work with appropriate professional scepticism and thus the capacity to identify non-compliance with laws and regulations and fraud.
As group auditors, our assessment of matters relating to non-compliance with laws or regulations and fraud differed at group and component level according to their particular circumstances. Our communications included a request to identify instances of non-compliance with laws and regulations and fraud that could give rise to a material misstatement of the group financial statements in addition to our risk assessment.
There are inherent limitations in the audit procedures described above and the further removed non-compliance with laws and regulations is from the events and transactions reflected in the financial statements, the less likely we would become aware of it. Also, the risk of not detecting a material misstatement due to fraud is higher than the risk of not detecting one resulting from error, as fraud may involve deliberate concealment by, for example, forgery or intentional misrepresentations, or through collusion.
A further description of our responsibilities is available on the Financial Reporting Council’s website at: https://www.frc.org.uk/auditorsresponsibilities. This description forms part of our auditor's report.
Use of our report
This report is made solely to the parent 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 parent 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 parent company and the parent company's members as a body, for our audit work, for this report, or for the opinions we have formed.
The income statement has been prepared on the basis that all operations are continuing operations.
There was no other comprehensive income (2021: £nil).
As permitted by s408 Companies Act 2006, the Company has not presented its own profit and loss account and related notes. The Company did not trade in the current or previous period, and therefore generated neither a profit or loss.
Sunridge JDM I Limited (“the company”) is a private limited company incorporated in England and Wales. The registered office is Monument Road, Bicker, Boston, PE20 3DJ.
The Group consists of Sunridge JDM I Limited and all of its subsidiaries.
The principal activity is disclosed in the Directors' report.
These financial statements have been prepared in accordance with FRS 102 “The Financial Reporting Standard applicable in the UK and Republic of Ireland” (“FRS 102”) and the requirements of the Companies Act 2006.
The financial statements are prepared in sterling, which is the functional currency of the Group. Monetary amounts in these financial statements are rounded to the nearest £.
The financial statements have been prepared under the historical cost convention. The principal accounting policies adopted are set out below.
The Company is a qualifying entity for the purposes of FRS 102, being a member of a group where the parent of that group prepares publicly available consolidated financial statements, including this company, which are intended to give a true and fair view of the assets, liabilities, financial position and profit or loss of the group. The company has therefore taken advantage of exemptions from the following disclosure requirements for parent company information presented within these consolidated financial statements:
Section 4 ‘Statement of Financial Position’: Reconciliation of the opening and closing number of shares;
Section 7 ‘Statement of Cash Flows’: Presentation of a statement of cash flow and related notes and disclosures;
Section 11 ‘Basic Financial Instruments’ and Section 12 ‘Other Financial Instrument Issues’: Carrying amounts, interest income/expense and net gains/losses for each category of financial instrument; basis of determining fair values; details of collateral, loan defaults or breaches, details of hedges, hedging fair value changes recognised in profit or loss and in other comprehensive income;
Section 26 ‘Share based Payment’: Share-based payment expense charged to profit or loss, reconciliation of opening and closing number and weighted average exercise price of share options, how the fair value of options granted was measured, measurement and carrying amount of liabilities for cash-settled share-based payments, explanation of modifications to arrangements;
Section 33 ‘Related Party Disclosures’: Compensation for key management personnel.
The consolidated group financial statements consist of the financial statements of the parent company Sunridge JDM I Limited together with all entities controlled by the parent company (its subsidiaries) and the group’s share of its interests in joint ventures and associates.
All financial statements are made up to 31 December 2022. Where necessary, adjustments are made to the financial statements of subsidiaries to bring the accounting policies used into line with those used by other members of the Group.
All intra-group transactions, balances and unrealised gains on transactions between group companies are eliminated on consolidation. Unrealised losses are also eliminated unless the transaction provides evidence of an impairment of the asset transferred.
Subsidiaries are consolidated in the Group’s financial statements from the date that control commences until the date that control ceases.
At the time of approving the financial statements, the directors have a reasonable expectation that the Group has adequate resources to continue in operational existence for the foreseeable future. In forming this expectation, the directors have considered a period in excess of 12 months from the date of approval of the financial statements. Thus the directors continue to adopt the going concern basis of accounting in preparing the financial statements.
Turnover is recognised in respect of the manufacture and supply of food products during the year, exclusive of value added tax and trade discounts.
Turnover is recognised to the extent that it is probable that the economic benefits will flow to the Group and the turnover can be reliably measured. Turnover 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 turnover is recognised:
Turnover 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 turnover 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.
Freehold land is not depreciated.
The gain or loss arising on the disposal of an asset is determined as the difference between the sale proceeds and the carrying value of the asset, and is recognised in the income statement.
Equity investments are measured at fair value through profit or loss, except for those equity investments that are not publicly traded and whose fair value cannot otherwise be measured reliably, which are recognised at cost less impairment until a reliable measure of fair value becomes available.
In the parent company financial statements, investments in subsidiaries, associates and jointly controlled entities are initially measured at cost and subsequently measured at cost less any accumulated impairment losses.
A subsidiary is an entity controlled by the Group. Control is the power to govern the financial and operating policies of the entity so as to obtain benefits from its activities.
At each reporting period end date, the Group reviews the carrying amounts of its tangible and intangible assets to determine whether there is any indication that those assets have suffered an impairment loss. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment loss (if any). Where it is not possible to estimate the recoverable amount of an individual asset, the company estimates the recoverable amount of the cash-generating unit to which the asset belongs.
The carrying amount of the investments accounted for using the equity method is tested for impairment as a single asset. Any goodwill included in the carrying amount of the investment is not tested separately for impairment.
Recoverable amount is the higher of fair value less costs to sell and value in use. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset for which the estimates of future cash flows have not been adjusted.
If the recoverable amount of an asset (or cash-generating unit) is estimated to be less than its carrying amount, the carrying amount of the asset (or cash-generating unit) is reduced to its recoverable amount. An impairment loss is recognised immediately in profit or loss, unless the relevant asset is carried at a revalued amount, in which case the impairment loss is treated as a revaluation decrease.
Recognised impairment losses are reversed if, and only if, the reasons for the impairment loss have ceased to apply. Where an impairment loss subsequently reverses, the carrying amount of the asset (or cash-generating unit) is increased to the revised estimate of its recoverable amount, but so that the increased carrying amount does not exceed the carrying amount that would have been determined had no impairment loss been recognised for the asset (or cash-generating unit) in prior years. A reversal of an impairment loss is recognised immediately in profit or loss, unless the relevant asset is carried at a revalued amount, in which case the reversal of the impairment loss is treated as a revaluation increase.
The Group has elected to apply the provisions of Section 11 ‘Basic Financial Instruments’ and Section 12 ‘Other Financial Instruments Issues’ of FRS 102 to all of its financial instruments.
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 and 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, which include debtors, are initially measured at transaction price including transaction costs and are subsequently carried at amortised cost using the effective interest method unless the arrangement constitutes a financing transaction, where the transaction is measured at the present value of the future receipts discounted at a market rate of interest. Financial assets classified as receivable within one year are not amortised.
Financial assets, other than those held at fair value through profit and loss, are assessed for indicators of impairment at each reporting end date.
Financial assets are impaired where there is objective evidence that, as a result of one or more events that occurred after the initial recognition of the financial asset, the estimated future cash flows have been affected. If an asset is impaired, the impairment loss is the difference between the carrying amount and the present value of the estimated cash flows discounted at the asset’s original effective interest rate. The impairment loss is recognised in profit or loss.
If there is a decrease in the impairment loss arising from an event occurring after the impairment was recognised, the impairment is reversed. The reversal is such that the current carrying amount does not exceed what the carrying amount would have been, had the impairment not previously been recognised. The impairment reversal is recognised in profit or loss.
Financial assets are derecognised only when the contractual rights to the cash flows from the asset expire or are settled, or when the Group transfers the financial asset and substantially all the risks and rewards of ownership to another entity, or if some significant risks and rewards of ownership are retained but control of the asset has transferred to another party that is able to sell the asset in its entirety to an unrelated third party.
Financial liabilities and equity instruments are classified according to the substance of the contractual arrangements entered into. An equity instrument is any contract that evidences a residual interest in the assets of the Group after deducting all of its liabilities.
Basic financial liabilities, including creditors, bank loans, loans from fellow group companies and preference shares that are classified as debt, are initially recognised at transaction price unless the arrangement constitutes a financing transaction, where the debt instrument is measured at the present value of the future payments discounted at a market rate of interest. Financial liabilities classified as payable within one year are not amortised.
Debt instruments are subsequently carried at amortised cost, using the effective interest rate method.
Trade creditors are obligations to pay for goods or services that have been acquired in the ordinary course of business from suppliers. Amounts payable are classified as current liabilities if payment is due within one year or less. If not, they are presented as non-current liabilities. Trade creditors are recognised initially at transaction price and subsequently measured at amortised cost using the effective interest method.
Financial liabilities are derecognised when the Group's contractual obligations expire or are discharged or cancelled.
Equity instruments issued by the group are recorded at the proceeds received, net of transaction costs. Dividends payable on equity instruments are recognised as liabilities once they are no longer at the discretion of the Group.
The tax expense represents the sum of the tax currently payable and deferred tax.
The tax currently payable is based on taxable profit for the year. Taxable profit differs from net profit as reported in the income statement because it excludes items of income or expense that are taxable or deductible in other years and it further excludes items that are never taxable or deductible. The Group’s liability for current tax is calculated using tax rates that have been enacted or substantively enacted by the reporting end date.
Deferred tax liabilities are generally recognised for all timing differences and deferred tax assets are recognised to the extent that it is probable that they will be recovered against the reversal of deferred tax liabilities or other future taxable profits. Such assets and liabilities are not recognised if the timing difference arises from goodwill or from the initial recognition of other assets and liabilities in a transaction that affects neither the tax profit nor the accounting profit.
The carrying amount of deferred tax assets is reviewed at each reporting end date and reduced to the extent that it is no longer probable that sufficient taxable profits will be available to allow all or part of the asset to be recovered. Deferred tax is calculated at the tax rates that are expected to apply in the period when the liability is settled or the asset is realised. Where items recognised in other comprehensive income or equity are chargeable to or deductible for tax purposes, the resulting current or deferred tax expense or income is presented in the same component of comprehensive income or equity as the transaction or other event that resulted in the tax expense or income. Deferred tax assets and liabilities are offset when the Company has a legally enforceable right to offset current tax assets and liabilities and the deferred tax assets and liabilities relate to taxes levied by the same tax authority.
The costs of short-term employee benefits are recognised as a liability and an expense, unless those costs are required to be recognised as part of the cost of stock or fixed assets.
The cost of any unused holiday entitlement is recognised in the period in which the employee’s services are received.
Termination benefits are recognised immediately as an expense when the Group is demonstrably committed to terminate the employment of an employee or to provide termination benefits.
Payments to defined contribution retirement benefit schemes are charged as an expense as they fall due.
Leases are classified as finance leases whenever the terms of the lease transfer substantially all the risks and rewards of ownership to the lessees. All other leases are classified as operating leases.
Assets held under finance leases are recognised as assets at the lower of the assets fair value at the date of inception and the present value of the minimum lease payments. The related liability is included in the statement of financial position as a finance lease obligation. Lease payments are treated as consisting of capital and interest elements. The interest is charged to profit or loss so as to produce a constant periodic rate of interest on the remaining balance of the liability.
Rentals payable under operating leases, including any lease incentives received, are charged to profit or loss on a straight line basis over the term of the relevant lease except where another more systematic basis is more representative of the time pattern in which economic benefits from the leased asset are consumed.
Transactions in currencies other than pounds sterling are recorded at the rates of exchange prevailing at the dates of the transactions. At each reporting end date, monetary assets and liabilities that are denominated in foreign currencies are retranslated at the rates prevailing on the reporting end date. Gains and losses arising on translation in the period are included in profit or loss.
Exceptional costs
Exceptional items are transactions that the directors consider do not fall within the ordinary activities of the Group and are presented separately in the Statement of Comprehensive Income due to their nature or size.
In the application of the Group’s accounting policies, the directors are required to make judgements, estimates and assumptions about the carrying amount of assets and liabilities that are not readily apparent from other sources. The estimates and associated assumptions are based on historical experience and other factors that are considered to be relevant. Actual results may differ from these estimates.
The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised where the revision affects only that period, or in the period of the revision and future periods where the revision affects both current and future periods.
The estimates and assumptions which have a significant risk of causing a material adjustment to the carrying amount of assets and liabilities are as follows.
Depreciation of tangible and amortisation of intangible fixed assets has been based on estimated useful lives and residual values deemed appropriate by the Directors. Estimated useful lives and residual values are reviewed annually and will be revised as appropriate.
The Group calculates the impairment of the carrying value of stock by assessing the amount and value of obsolete and slow-moving stock, in addition to stock past its expiration date.
The whole of turnover is attributable to the supply of food products during the current and previous year.
Cancelled acquisition costs relate to a potential acquisition in the year that was subsequently terminated.
Restructuring costs relate to one-off costs relating to restructuring of the Company's senior management team post-acquisition and operational restructuring to deliver efficiencies in future periods.
Operational efficiency project costs relate to one-off costs relating to improving the Company’s operational efficiency and business planning systems.
The average monthly number of persons (including directors) employed by the Group and Company during the year was:
Their aggregate remuneration comprised:
The directors did not receive any remuneration for their services (2021: £nil).
The actual charge for the year can be reconciled to the expected credit for the year based on the profit or loss and the standard rate of tax as follows:
Amortisation is charged to administrative expenses.
The net carrying value of tangible fixed assets includes the following in respect of assets held under finance leases or hire purchase contracts.
During the year, the Company subscribed to a total of 5,977,983 Ordinary shares of £0.01 each at a consideration of £1 per share in its subsidiary, Sunridge JDM II Limited.
Details of the Company's subsidiaries at 31 December 2022 are as follows:
The difference between purchase price or production cost of stocks and their replacement cost is not material.
Bank loans comprise stock loans, a term loan and a mortgage, with outstanding balances at the year end amounting to £4,775,780 (2021: £3,916,869), £8,295,000 (2021: £nil) and £2,270,351 (2021: £2,381,531) respectively.
Other loans comprise invoice financing and loan notes, with outstanding balances at the year end amounting to £5,138,973 (2021: £3,677,235) and £nil (2021: £7,705,660) respectively.
Loan notes are unsecured, attract interest at a rate of 3% and are redeemable one year after the date of issue.
The term loan attracts interest at a rate of 3.65% over the Bank of England Base Rate and is repayable in quarterly instalments of £250,000 commencing 30 September 2022, rising to £375,000 on 31 March 2024 with a final bullet repayment in July 2025.
The mortgage attracts interest at a rate of 2.25% over the Bank of England Base Rate and is repayable in equal monthly instalments of £16,167 with a final bullet repayment in May 2026.
The stock loans and invoice financing attract interest at a rate of 2.20% over the Bank of England Base Rate.
With the exception of loan notes, all bank or loan facilities are secured by way of a debenture including a fixed charge over all present freehold and leasehold property, a first fixed charge over book and other debts, chattels, goodwill and uncalled capital, both present and a future and First Floating Charge over all assets and undertaking both present and future dated 1 July 2005.
Both fixed and a floating charge containing negative pledges are held by HSBC over all of the properties and undertakings of the Group.
Finance lease payments represent rentals payable by the Group for certain items of plant and machinery.
Finance lease obligations are secured on the assets to which they relate.
The following are the major deferred tax liabilities and assets recognised by the Group and Company, and movements thereon:
The deferred tax liability set out above is expected to reverse in part within 12 months and relates to accelerated capital allowances that are expected to mature within the same period.
A defined contribution pension scheme is operated for all qualifying employees. The assets of the scheme are held separately from those of the group in an independently administered fund.
At the balance sheet date, outstanding contributions amounted to £23,935 (2021: £20,556) and are included in other creditors.
Ordinary A, B, C and D shares rank pari passu in respect to voting, capital and dividend rights.
Preferred shares have no right to vote and the right to receive £1 per share on winding up of the business. Preferred shares have equal rights with respect to dividends as Ordinary A, B, C and D shares.
On 7 June 2022, 936,479 Preferred Ordinary shares each with a nominal value of £0.01 were issued for an aggregate consideration of £936,479.
On 7 June 2022, a further 231,172 B Preferred Ordinary shares each with a nominal value of £0.01 were issued for an aggregate consideration of £231,172.
On 29 September 2022, a further 3,827,238 Preferred Ordinary shares each with a nominal value of £0.01 were issued for an aggregate consideration of £3,827,238.
On 29 September 2022, a further 944,762 B Preferred Ordinary shares each with a nominal value of £0.01 were issued for an aggregate consideration of £944,762.
Of these share issues with an aggregate consideration of £5,939,651, £4,771,999 was settled in cash and £1,167,652 was issued in settlement of deferred consideration recorded in creditors from a past acquisition. At the year end date, unpaid share capital amounted to £76,666 (2021: £114,998) and is recorded in debtors.
This includes any excess consideration over nominal value on the issue of shares.
This includes all retained profits and losses after the payment of dividends.
At the reporting end date the Group had outstanding commitments for future minimum lease payments under non-cancellable operating leases, which fall due as follows:
On 22 February 2023, 158,400 A Ordinary shares were cancelled to the value of £1,584. Additionally, 16,945,262 Preferred Ordinary shares to the value of £169,453 were also cancelled.
On the same day, the Company purchased 7,500 of its own D Ordinary shares at par.
On 24 July 2023, the owners of the Sunridge JDM I Limited completed an acquisition and as a result, the company’s immediate and ultimate parent undertaking became Jardins and Broch Inc, a company incorporated in the USA. Costs associated with this transaction borne by the Group were funded via the issue of share capital.