Crop's Foods Limited - Limited company accounts 18.2

REGISTERED NUMBER: 02368785 (England and Wales)

STRATEGIC REPORT,

REPORT OF THE DIRECTORS AND

FINANCIAL STATEMENTS

FOR THE YEAR ENDED 30 JUNE 2019

FOR

CROP'S FOODS LIMITED

Page

Company Information

1

Strategic Report

2

Report of the Directors

4

Report of the Independent Auditors

6

Statement of Comprehensive Income

8

Balance Sheet

9

Statement of Changes in Equity

10

Cash Flow Statement

11

Notes to the Cash Flow Statement

12

Notes to the Financial Statements

13

DIRECTORS:

M D Cullinane

P A Delbaere

M Delbaere

P A Weatherby

SECRETARY:

M D Cullinane

REGISTERED OFFICE:

254 Capability Green

Luton

LU1 3LU

REGISTERED NUMBER:

02368785 (England and Wales)

AUDITORS:

GBJ LLP

Statutory Auditor

Sterling House

27 Hatchlands Road

Redhill

Surrey

RH1 6RW

BANKERS:

BNP Paribas

10 Harewood Avenue

London

NW1 6AA

The directors present their strategic report for the year ended 30 June 2019.

REVIEW OF BUSINESS

The increase in turnover for the year was due to realisation of previous work to expand the product and

category area within existing customer portfolios. Activities from Homestead Foods Ltd, a fellow subsidiaries

of Crop's & Partners UK Ltd has been fully integrated into Crop's Foods Ltd.

Product development will continue to be a key focus, as the company changes its product and sector focus.

PRINCIPAL RISKS AND UNCERTAINTIES

Crops's Foods Limited (formerly MDC Foods Limited) ('the company') uses various financial instruments

including bank guarantees, cash and other items, such as trade debtors and trade creditors, that arise directly

from its operations. The main purpose of these financial instruments is to raise finance for the company's

operations. The existence of these financial instruments exposes the company to a number of financial risks.

The main risks arising from the company's financial instruments are market risk, currency risk, credit risk and

liquidity risk. The directors review and agree policies, which remain unchanged from previous years, for

managing each of these risks, summarised below.

Market risk

Market risk encompasses both currency risk and price risk. The company's policies for managing currency

risk are considered along with those for managing cash flow.

Currency risk

The company is exposed to transaction foreign exchange risk. Transaction exposures, including those

associated with forecast transactions, are monitored with daily market expectations and forecasts and are

hedged when known, principally using forward currency contracts or options.

Credit risk

The company's principal financial assets are cash and trade debtors. The principal credit risk arises therefore

from its trade debtors.

In order to manage credit risk, the directors set credit limits for customers, based on a combination of

payment history and third party credit references. These limits are reviewed by the Financial Director on a

regular basis in conjunction with debt aging, collection history and market awareness of the company's

customers.

Liquidity risk

The company seeks to manage financial risk by ensuring sufficient liquidity is available to meet foreseeable

needs and to invest cash assets safely and profitably.

FINANCIAL KEY PERFORMANCE INDICATORS

Financial

The company reports on a number of key performance indicators and ratios on a monthly basis and

measures its financial performance using the following main measures:

i) Turnover is a key measure of the company's success in winning new business and retaining existing

customers. The turnover between 2019 and 2018 increased due to product category expansion, additional

market channel entries and the integration of Homestead Foods Limited activities..

ii) Cash collection is an important part of effective capital and treasury measurement. At the financial year end

debtor days were in line with target at 49 days (2018: 54 days).

iii) Operating profit of £1,233,761 (2018: £683,387) is stated after a bad debt cost of £70,000 (2018: £33,000).

Included is a foreign currency gain of £21,014 (2018: gain of £12,402).

Non-financial

The company measures its non-financial performance in several areas, as follows:

i) The securing of new business is a critical area if the company is to continue to grow. The number of new

customers won during the year is therefore closely monitored against targets set by the directors. During the

financial year the market place presented many challenges to possible growth, however progress was made

in this area and was therefore considered satisfactory by the directors.

ii) The level of business loss is also measured. Business loss is categorised into two areas - those under our

control and those outside of our control (customers going into receivership, closing site, etc). The level of

business loss in both areas was as expected.

iii) Quality control is a further critical area of the business. A key measurement is the number of customer

complaints per packs of produce. The level of customer complaints continued to fall in line with the

expectation of directors.

FUTURE DEVELOPMENTS

Product development will continue to be a key focus across all sectors

POSITION OF THE COMPANY AT THE YEAR END

The results for the year and the financial position at the year end were considered satisfactory by the directors

who expect continued growth in the foreseeable future.

ON BEHALF OF THE BOARD:

P A Weatherby - Director

20 March 2020

The directors present their report with the financial statements of the company for the year ended 30 June 2019.

DIVIDENDS

During the year a dividend of £715,713 (2018: £276,738) was paid. The directors have not recommended a

final dividend for the year 30 June 2019.

DIRECTORS

The directors shown below have held office during the whole of the period from 1 July 2018 to the date of this

report.

M D Cullinane

P A Delbaere

M Delbaere

P A Weatherby

CHARITABLE DONATIONS

The company made charitable contributions of £26,166 in the year (2018: £6,100).

DISCLOSURE IN THE STRATEGIC REPORT

Details of items required under Schedule 7 to the Large and Medium-sized Companies and Groups

(Accounts and Report Regulations) 2008 are provided in the Strategic Report on pages 2 and 3.

STATEMENT OF DIRECTORS' RESPONSIBILITIES

The directors are responsible for preparing the Strategic Report, the Report of the Directors and the financial

statements in accordance with applicable law and regulations.

Company law requires the directors to prepare financial statements for each financial year. Under that law

the directors have elected to prepare the financial statements in accordance with United Kingdom Generally

Accepted Accounting Practice (United Kingdom Accounting Standards and applicable law). 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 and then apply them consistently;

-	make judgements and accounting estimates that are reasonable and prudent;

-	state whether applicable accounting standards have been followed, subject to any material departures disclosed and explained in the financial statements;

-	prepare the financial statements on the going concern basis unless it is inappropriate to presume that the company will continue in business.

The directors are responsible for keeping adequate accounting records that are sufficient to show and explain

the company's transactions and disclose with reasonable accuracy at any time the financial position of the

company and enable them to ensure that the financial statements comply with the Companies Act 2006. 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.

STATEMENT AS TO DISCLOSURE OF INFORMATION TO AUDITORS

So far as the directors are aware, there is no relevant audit information (as defined by Section 418 of the

Companies Act 2006) of which the company's auditors are unaware, and each director has taken all the steps

that he ought to have taken as a director in order to make himself aware of any relevant audit information and

to establish that the company's auditors are aware of that information.

ON BEHALF OF THE BOARD:

P A Weatherby - Director

20 March 2020

Opinion

We have audited the financial statements of Crop's Foods Limited (the 'company') for the year ended

30 June 2019 which comprise the Statement of Comprehensive Income, Balance Sheet, Statement of

Changes in Equity, Cash Flow Statement and Notes to the Cash Flow Statement, Notes to the Financial

Statements, including a summary of significant accounting policies. The financial reporting framework that

has been applied in their preparation is applicable law and United Kingdom Accounting Standards, including

Financial Reporting Standard 102 'The Financial Reporting Standard applicable in the UK and Republic of

Ireland' (United Kingdom Generally Accepted Accounting Practice).

In our opinion the financial statements:

-	give a true and fair view of the state of the company's affairs as at 30 June 2019 and of its profit for the year then ended;

-	have been properly prepared in accordance with United Kingdom Generally Accepted Accounting Practice; and

-	have been prepared in accordance with the requirements of the Companies Act 2006.

Basis for opinion

We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and

applicable law. Our responsibilities under those standards are further described in the 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 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

We have nothing to report in respect of the following matters in relation to which the ISAs (UK) require us to

report to you where:

-	the directors' use of the going concern basis of accounting in the preparation of the financial statements is not appropriate; or

-

the directors have not disclosed in the financial statements any identified material uncertainties that may cast significant doubt about the company's ability to continue to adopt the going concern basis of accounting for a period of at least twelve months from the date when the financial statements are authorised for issue.

Other information

The directors are responsible for the other information. The other information comprises the information in the

Strategic Report and the Report of the Directors, but does not include the financial statements and our Report

of the Auditors 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.

In connection with our audit of the financial statements, 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 audit or otherwise appears to be materially misstated. If we identify such

material inconsistencies or apparent material misstatements, we are required to determine whether there is a

material misstatement in the financial statements or a material misstatement of the other information. 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 Report of the Directors for the financial year for which the financial statements are prepared is consistent with the financial statements; and

-	the Strategic Report and the Report of the Directors have been prepared in accordance with applicable legal requirements.

Matters on which we are required to report by exception

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 Report of the Directors.

We have nothing to report in respect of the following matters where the Companies Act 2006 requires us to

report to you if, in our opinion:

-	adequate accounting records have not been kept, or returns adequate for our audit have not been received from branches not visited by us; or

-	the financial statements are not in agreement with the accounting records and returns; or

-	certain disclosures of directors' remuneration specified by law are not made; or

-	we have not received all the information and explanations we require for our audit.

Responsibilities of directors

As explained more fully in the Statement of Directors' Responsibilities set out on page four, 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 necessary to enable the preparation of financial

statements that are free from material misstatement, whether due to fraud or error.

In preparing the financial statements, the directors are responsible for assessing the company's ability to

continue as a going concern, disclosing, as applicable, matters related to going concern and using the going

concern basis of accounting unless the directors either intend to liquidate the company or to cease

operations, or have no realistic alternative but to do so.

Auditors' responsibilities for the audit of the financial statements

Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free

from material misstatement, whether due to fraud or error, and to issue a Report of the Auditors that includes

our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit

conducted in accordance with ISAs (UK) will always detect a material misstatement when it exists.

Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate,

they could reasonably be expected to influence the economic decisions of users taken on the basis of these

financial statements.

A further description of our responsibilities for the audit of the financial statements is located on the Financial

Reporting Council's website at www.frc.org.uk/auditorsresponsibilities. This description forms part of our

Report of the Auditors.

Use of our report

This report is made solely to the company's members, as a body, in accordance with Chapter 3 of Part 16 of

the Companies Act 2006. Our audit work has been undertaken so that we might state to the company's

members those matters we are required to state to them in a Report of the Auditors 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.

Nigel Green (Senior Statutory Auditor)

for and on behalf of GBJ LLP

Statutory Auditor

Sterling House

27 Hatchlands Road

Redhill

Surrey

RH1 6RW

20 March 2020

TURNOVER

3

115,015,245

68,377,141

Cost of sales

110,527,507

65,588,322

GROSS PROFIT

4,487,738

2,788,819

Administrative expenses

3,253,977

2,105,432

OPERATING PROFIT

5

1,233,761

683,387

Write off intra-group loan

6

1,772,682

-

3,006,443

683,387

Interest receivable and similar income

561

1,956

3,007,004

685,343

Interest payable and similar expenses

7

16,398

1,569

PROFIT BEFORE TAXATION

2,990,606

683,774

Tax on profit

8

243,630

130,298

PROFIT FOR THE FINANCIAL YEAR

2,746,976

553,476

OTHER COMPREHENSIVE INCOME

-

-

TOTAL COMPREHENSIVE INCOME FOR THE YEAR

2,746,976

553,476

FIXED ASSETS

Tangible assets

10

31,495

59,022

CURRENT ASSETS

Stocks

11

1,203,182

575,714

Debtors

12

18,779,568

12,492,335

Cash in hand

3,309,930

965,914

23,292,680

14,033,963

CREDITORS

Amounts falling due within one year

13

19,109,461

11,906,848

NET CURRENT ASSETS

4,183,219

2,127,115

TOTAL ASSETS LESS CURRENT LIABILITIES

4,214,714

2,186,137

PROVISIONS FOR LIABILITIES

16

-

2,686

NET ASSETS

4,214,714

2,183,451

CAPITAL AND RESERVES

Called up share capital

17

50,000

50,000

Retained earnings

18

4,164,714

2,133,451

SHAREHOLDERS' FUNDS

4,214,714

2,183,451

The financial statements were approved by the Board of Directors on 20 March 2020 and were signed on its behalf by:

P A Weatherby - Director

Called up

share

Retained

Total

capital

earnings

equity

£

£

£

Balance at 1 July 2017

50,000

1,856,713

1,906,713

Changes in equity

Dividends

-

(276,738

)

(276,738

)

Total comprehensive income

-

553,476

553,476

Balance at 30 June 2018

50,000

2,133,451

2,183,451

Changes in equity

Dividends

-

(715,713

)

(715,713

)

Total comprehensive income

-

2,746,976

2,746,976

Balance at 30 June 2019

50,000

4,164,714

4,214,714

Cash flows from operating activities

Cash generated from operations

1

4,874,964

(2,653,896

)

Interest paid

(16,398

)

(1,569

)

Tax paid

(152,686

)

(228,210

)

Net cash from operating activities

4,705,880

(2,883,675

)

Cash flows from investing activities

Purchase of tangible fixed assets

(9,322

)

(26,827

)

Interest received

561

1,956

Net cash from investing activities

(8,761

)

(24,871

)

Cash flows from financing activities

Equity dividends paid

(715,713

)

(276,738

)

Net cash from financing activities

(715,713

)

(276,738

)

Increase/(decrease) in cash and cash equivalents

3,981,406

(3,185,284

)

Cash and cash equivalents at beginning of year

2

(2,554,950

)

630,334

Cash and cash equivalents at end of year

2

1,426,456

(2,554,950

)

1.	RECONCILIATION OF PROFIT BEFORE TAXATION TO CASH GENERATED FROM OPERATIONS

2019

2018

£

£

Profit before taxation

2,990,606

683,774

Depreciation charges

36,849

31,417

Finance costs

16,398

1,569

Finance income

(561

)

(1,956

)

3,043,292

714,804

(Increase)/decrease in stocks

(627,468

)

53,296

(Increase)/decrease in trade and other debtors

(6,287,233

)

473,235

Increase/(decrease) in trade and other creditors

8,746,373

(3,895,231

)

Cash generated from operations

4,874,964

(2,653,896

)

2.	CASH AND CASH EQUIVALENTS

The amounts disclosed on the Cash Flow Statement in respect of cash and cash equivalents are in

respect of these Balance Sheet amounts:

Year ended 30 June 2019

30.6.19

1.7.18

£

£

Cash and cash equivalents

3,309,930

965,914

Bank overdrafts

(1,883,474

)

(3,520,864

)

1,426,456

(2,554,950

)

Year ended 30 June 2018

30.6.18

1.7.17

£

£

Cash and cash equivalents

965,914

630,334

Bank overdrafts

(3,520,864

)

-

(2,554,950

)

630,334

1.	STATUTORY INFORMATION

Crop's Foods Limited is a private company, limited by shares , registered in England and Wales. The

company's registered number and registered office address can be found on the Company Information

page.

2.	ACCOUNTING POLICIES

Basis of preparing the financial statements

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

Significant judgements and estimates

Preparation of the financial statements requires management to make significant judgements and

estimates. The only items in the financial statements where these judgements and estimates have

been made is in the depreciation rate of tangible fixed assets and a bad debt provision in connection

with trade debtors.

Turnover and revenue recognition

Turnover represents amounts receivable for the sale of frozen foods, excluding discounts, rebates,

value added tax and other sales taxes.

Revenue is recognised as and when the company satisfies a performance obligation and the

significant risks and rewards of ownership have been transferred to the customer, which may be upon

shipment, acceptance of the goods by the customer, or the product being ready for delivery, based on

specific contract terms.

Tangible fixed assets

Depreciation is provided at the following annual rates in order to write off the cost less estimated residual value of each asset over its estimated useful life.

Office equipment and furniture

-

25% on cost

Motor vehicles

-

33% on cost

Computer equipment

-

33% on cost

Stocks

Stock is stated at the lower of cost and net realisable value, being the estimated selling price less

costs to complete and sell. Cost is based on the cost of purchase on a first in, first out basis.

At each reporting date, stock is assessed for obsolescence. If stock is impaired or slow moving, the

carrying amount is reduced to its selling price less costs to sell. The impairment loss is recognised

immediately in profit or loss.

Taxation

Taxation for the year comprises current and deferred tax. Tax is recognised in the Statement of

Comprehensive Income, except to the extent that it relates to items recognised in other

comprehensive income or directly in equity.

Current or deferred taxation assets and liabilities are not discounted.

Current tax is recognised at the amount of tax payable using the tax rates and laws that have been

enacted or substantively enacted by the balance sheet date.

Deferred tax

Deferred tax is recognised in respect of all timing differences that have originated but not reversed at

the balance sheet date.

Timing differences arise from the inclusion of income and expenses in tax assessments in periods

different from those in which they are recognised in financial statements. Deferred tax is measured

using tax rates and laws that have been enacted or substantively enacted by the year end and that are

expected to apply to the reversal of the timing difference.

Unrelieved tax losses and other deferred tax assets are recognised only to the extent that it is probable

that they will be recovered against the reversal of deferred tax liabilities or other future taxable profits.

Financial instruments

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 entity after deducting all of its financial liabilities.

Where the contractual obligations of financial instruments (including share capital) are equivalent to a

similar debt instrument, those financial instruments are classed as financial liabilities. Financial

liabilities are losses relating to financial liabilities are included in the Statement of Comprehensive

Income. Financepresented as such in the Statement of Financial Position. Finance costs and gains or

costs are calculated so as to produce a constant rate of return on the outstanding liability.

Where the contractual terms of share capital do not have any terms meeting the definition of a

financial liability then this is classed as an equity instrument. Dividends and distributions relating to

equity instruments are debited directly to equity.

Financial instruments that are derivatives are valued at each period end, and the movement in value is

taken to the Statement of Comprehensive Income.

Foreign currency translation

The company's functional and presentational currency is GBP.

Foreign currency transactions are translated into the functional currency using the spot exchange rates

at the dates of the transactions.

At each period end foreign currency monetary items are translated using the closing rate.

Non-monetary items measured at historical cost are translated using the exchange rate at the date of

the transaction and when fair value was determined. non-monetary items measured at fair value are

measured using the exchange rate

Foreign exchange gains and losses resulting from the settlement of transactions and from the

translation at period-end exchange rates of monetary assets and liabilities denominated in foreign

currencies are recognised in the Statement of comprehensive income.

Operating leases

Leases in which substantially all the risks and rewards of ownership are retained by the lessor are

classified as operating leases. Payments made under operating leases are charged to profit and loss

on a straight-line basis over the period of the lease.

Defined contribution pension plan

The company operates a defined contribution plan for its employees. A defined contribution plan is a

pension plan under which the company pays fixed contributions into a separate entity. Once the

contributions have been paid the company has no further payment obligations.

The contributions are recognised as an expense in the Statement of comprehensive income when they

fall due. Amounts not paid are shown in accruals as a liability in the Statement of financial position.

The funds.assets of the plan are held separately from the company in independently administered

Invoice discounting

Trade Debtors are subject to an invoice discounting facility whereby an advance is received based

upon, and secured upon, trade debtors. The company has retained significant risks and rewards

relating to the discounted debts and separate presentation has been adopted whereby the gross debt

and a corresponding liability in respect of the advance received is shown separately on the Balance

Sheet. The interest element of the invoice discounter's charge is recognised as it accrues and is

included in the Profit and Loss Account.

3.

TURNOVER

The turnover and profit before taxation are attributable to the one principal activity of the company.

An analysis of turnover by geographical market is given below:

2019

2018

£

£

United Kingdom

111,416,203

63,144,418

Europe

3,599,042

5,232,723

115,015,245

68,377,141

4.	EMPLOYEES AND DIRECTORS

2019

2018

£

£

Wages and salaries

1,782,636

1,134,089

Social security costs

222,640

144,679

Other pension costs

63,333

79,984

2,068,609

1,358,752

The average number of employees during the year was as follows:

2019

2018

Directors

2

1

Administration

34

22

Sales

7

5

43

28

2019

2018

£

£

Directors' remuneration

263,961

155,809

Directors' pension contributions to money purchase schemes

1,517

40,000

The number of directors to whom retirement benefits were accruing was as follows:

Money purchase schemes

1

1

Information regarding the highest paid director for the year ended 30 June 2019 is as follows:

2019

£

Emoluments etc

221,904

The highest paid director received remuneration of £221,904 (2018: £155,809).

5.	OPERATING PROFIT

The operating profit is stated after charging/(crediting):

2019

2018

£

£

Other operating leases

169,783

125,672

Depreciation - owned assets

36,849

31,483

Auditors' remuneration

25,000

12,600

Other non- audit services

4,399

3,150

Foreign exchange differences

(21,014

)

(12,402

)

6.	EXCEPTIONAL ITEMS

2019

2018

£

£

Write off intra-group loan

1,772,682

-

7.

INTEREST PAYABLE AND SIMILAR EXPENSES

2019

2018

£

£

Bank interest

16,398

1,569