ACCOUNTS - Final Accounts

Operating profit

The operating profit is stated after charging:

INNOVATE FOODS LIMITED - Company Information

Caseware UK (AP4) 2022.0.179 2022.0.179 2022-12-312023-05-052023-05-052022-12-312023-05-05falsefalse882022-01-01falseNo description of principal activity101 SC116286 2022-01-01 2022-12-31 SC116286 2021-01-01 2021-12-31 SC116286 2022-12-31 SC116286 2021-12-31 SC116286 2021-01-01 SC116286 1 2022-01-01 2022-12-31 SC116286 1 2021-01-01 2021-12-31 SC116286 5 2022-01-01 2022-12-31 SC116286 5 2021-01-01 2021-12-31 SC116286 7 2022-01-01 2022-12-31 SC116286 7 2021-01-01 2021-12-31 SC116286 d:Director1 2022-01-01 2022-12-31 SC116286 d:Director2 2022-01-01 2022-12-31 SC116286 d:Director3 2022-01-01 2022-12-31 SC116286 d:RegisteredOffice 2022-01-01 2022-12-31 SC116286 e:Buildings 2022-01-01 2022-12-31 SC116286 e:Buildings 2022-12-31 SC116286 e:Buildings 2021-12-31 SC116286 e:Buildings e:OwnedOrFreeholdAssets 2022-01-01 2022-12-31 SC116286 e:PlantMachinery 2022-01-01 2022-12-31 SC116286 e:PlantMachinery 2022-12-31 SC116286 e:PlantMachinery 2021-12-31 SC116286 e:PlantMachinery e:OwnedOrFreeholdAssets 2022-01-01 2022-12-31 SC116286 e:MotorVehicles 2022-01-01 2022-12-31 SC116286 e:MotorVehicles 2022-12-31 SC116286 e:MotorVehicles 2021-12-31 SC116286 e:MotorVehicles e:OwnedOrFreeholdAssets 2022-01-01 2022-12-31 SC116286 e:FurnitureFittings 2022-01-01 2022-12-31 SC116286 e:FurnitureFittings 2022-12-31 SC116286 e:FurnitureFittings 2021-12-31 SC116286 e:FurnitureFittings e:OwnedOrFreeholdAssets 2022-01-01 2022-12-31 SC116286 e:OwnedOrFreeholdAssets 2022-01-01 2022-12-31 SC116286 e:CurrentFinancialInstruments 2022-12-31 SC116286 e:CurrentFinancialInstruments 2021-12-31 SC116286 e:Non-currentFinancialInstruments 2022-12-31 SC116286 e:Non-currentFinancialInstruments 2021-12-31 SC116286 e:CurrentFinancialInstruments e:WithinOneYear 2022-12-31 SC116286 e:CurrentFinancialInstruments e:WithinOneYear 2021-12-31 SC116286 e:Non-currentFinancialInstruments e:AfterOneYear 2022-12-31 SC116286 e:Non-currentFinancialInstruments e:AfterOneYear 2021-12-31 SC116286 f:UnitedKingdom 2022-01-01 2022-12-31 SC116286 f:UnitedKingdom 2021-01-01 2021-12-31 SC116286 f:RestEuropeOutsideUK 2022-01-01 2022-12-31 SC116286 f:RestEuropeOutsideUK 2021-01-01 2021-12-31 SC116286 f:RestWorldOutsideUK 2022-01-01 2022-12-31 SC116286 f:RestWorldOutsideUK 2021-01-01 2021-12-31 SC116286 e:UKTax 2022-01-01 2022-12-31 SC116286 e:UKTax 2021-01-01 2021-12-31 SC116286 e:ShareCapital 2022-12-31 SC116286 e:ShareCapital 2021-12-31 SC116286 e:ShareCapital 2021-01-01 SC116286 e:RetainedEarningsAccumulatedLosses 2022-01-01 2022-12-31 SC116286 e:RetainedEarningsAccumulatedLosses 2022-12-31 SC116286 e:RetainedEarningsAccumulatedLosses 2021-01-01 2021-12-31 SC116286 e:RetainedEarningsAccumulatedLosses 2021-12-31 SC116286 e:RetainedEarningsAccumulatedLosses 2021-01-01 SC116286 e:FinancialAssetsDesignatedFairValueThroughProfitOrLoss 2022-12-31 SC116286 e:FinancialAssetsDesignatedFairValueThroughProfitOrLoss 2021-12-31 SC116286 e:FinancialLiabilitiesFairValueThroughProfitOrLoss e:ListedExchangeTraded 2022-12-31 SC116286 e:FinancialLiabilitiesFairValueThroughProfitOrLoss e:ListedExchangeTraded 2021-12-31 SC116286 e:AcceleratedTaxDepreciationDeferredTax 2022-12-31 SC116286 e:AcceleratedTaxDepreciationDeferredTax 2021-12-31 SC116286 e:OtherDeferredTax 2022-12-31 SC116286 e:OtherDeferredTax 2021-12-31 SC116286 d:OrdinaryShareClass1 2022-01-01 2022-12-31 SC116286 d:OrdinaryShareClass1 2022-12-31 SC116286 d:OrdinaryShareClass1 2021-12-31 SC116286 d:FRS102 2022-01-01 2022-12-31 SC116286 d:Audited 2022-01-01 2022-12-31 SC116286 d:FullAccounts 2022-01-01 2022-12-31 SC116286 d:PrivateLimitedCompanyLtd 2022-01-01 2022-12-31 SC116286 e:WithinOneYear 2022-12-31 SC116286 e:WithinOneYear 2021-12-31 SC116286 e:BetweenOneFiveYears 2022-12-31 SC116286 e:BetweenOneFiveYears 2021-12-31 SC116286 e:HirePurchaseContracts e:WithinOneYear 2022-12-31 SC116286 e:HirePurchaseContracts e:WithinOneYear 2021-12-31 SC116286 e:HirePurchaseContracts e:BetweenOneFiveYears 2022-12-31 SC116286 e:HirePurchaseContracts e:BetweenOneFiveYears 2021-12-31 SC116286 e:PlantMachinery e:LeasedAssetsHeldAsLessee 2022-12-31 SC116286 e:PlantMachinery e:LeasedAssetsHeldAsLessee 2021-12-31 SC116286 e:LeasedAssetsHeldAsLessee 2022-12-31 SC116286 e:LeasedAssetsHeldAsLessee 2021-12-31 iso4217:GBP xbrli:shares xbrli:pure

Registered number: SC116286

INNOVATE FOODS LIMITED

DIRECTORS' REPORT AND FINANCIAL STATEMENTS

FOR THE YEAR ENDED 31 DECEMBER 2022

INNOVATE FOODS LIMITED

COMPANY INFORMATION

Directors	Mr A M Dumbreck
	Mr M Bross
	Mr F Dervieux


Registered number	SC116286


Registered office	Barncraig
	Boreland Road
	Kirkcaldy
	Fife
	KY1 2YG


Independent auditors	EQ Accountants LLP
	Chartered Accountants
	Pentland House
	Saltire Centre
	Glenrothes
	Fife
	KY6 2AH

INNOVATE FOODS LIMITED

CONTENTS

	Page
Strategic report	1 - 2
Directors' report	3 - 4
Independent auditors' report	5 - 7
Statement of comprehensive income	8
Statement of financial position	9
Statement of changes in equity	10
Statement of cash flows	11
Analysis of net debt	12
Notes to the financial statements	13 - 25

INNOVATE FOODS LIMITED

STRATEGIC REPORT

FOR THE YEAR ENDED 31 DECEMBER 2022

Introduction

The directors have pleasure in presenting their strategic report for the period ended 31 December 2022.

Business review

The company is an award-winning producer of bespoke food for the foodservice and retail sectors with a balanced portfolio of blue-chip customers in UK, EU and beyond.
The company became part of the Frostkrone Food Group in 2020. Given the significant impacts of both Covid and the Ukraine crises the Directors continue to believe that this was an extremely positive development. The continuing growth of the business and improvements in profitability, despite the headwinds of substantial increases to the cost of raw materials and production costs, underline the perspective. At the same time the effects of Brexit have been ameliorated due to our participation in a cross-border business.
Sales grew significantly during the 2022 accounting period, on a like for like basis.
In alignment with the promise inherent in the company name, we continue to focus on new product development as a fundamental strategy to drive sustainable growth in the future and invested significantly during the period on enhancing capabilities and capacity in addition to new efficiency measures.
Margins have largely survived the continuing effects of 'long Covid' upon the hospitality industry, however the Ukraine crisis has caused significant impact upon raw material input and energy costs which have inhibited profitability. Fortunately, our efforts to improve efficiency have had a positive effect while the continuing upward pressures are beginning to moderate.
Cash balances are holding up through a combination of retained profits and cashflow management and the directors have continued paying creditors on time.
The company's financial strength is further highlighted by a second year of increased net assets in the region of 20%.

Page 1

INNOVATE FOODS LIMITED

STRATEGIC REPORT (CONTINUED)

FOR THE YEAR ENDED 31 DECEMBER 2022

Principal risks and uncertainties

The principal risks impacting on the company centre around continuing volatility in market prices and external factors beyond its control, such as Ukraine, the ongoing effects of Covid-19, Brexit the cost of living challenges and domestic government policy..
Margins are monitored monthly and cashflow is monitored weekly. The directors make decisions to ensure that margins are maintained at a sustainable level in the long term.
The effects of the Ukraine invasion during 2022 plus the lingering elements of Covid-19 have seen Innovate Foods Limited make and execute decisive judgements in order to mitigate the effects. In both retail and foodservice the costs of living crisis has impacted consumer spending decisions while upward trajectory to energy costs has also directly affected decisions taken by the hospitality sector, including temporary or permanent closure of pubs, hotels and restaurants. The directors continue to monitor the situation and develop customer solutions through efficiency in manufacturing that meet the economic realities head on. The directors believe that the company is well place to meet these challenges due to its continuing investment in people, capital equipment and new product development for its wide and balanced customer portfolio.
Interest rate risk – the company currently has no bank borrowings so is not directly impacted by interest rate risks.
Currency risk – the company holds a proportion of its cash balance in Euros to mitigate this risk. Foreign exchange rates are regularly monitored however the company does not hedge currency risk.
Regular conversations are held with overseas and UK suppliers & partner companies to manage supply chains to best effect.

Financial key performance indicators

Key performance indicators are monitored over key areas including the monitoring of actual results against budget and prior periods. One of the company’s key performance indicators is turnover growth. Turnover increased by 20% to £23.97m from £19.98m in the previous year.

This report was approved by the board and signed on its behalf.

Mr A M Dumbreck

Director

Date: 5 May 2023

Page 2

INNOVATE FOODS LIMITED

DIRECTORS' REPORT

FOR THE YEAR ENDED 31 DECEMBER 2022

The directors present their report and the financial statements for the year ended 31 December 2022.

Directors' responsibilities statement

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.

Results and dividends

The profit for the year, after taxation, amounted to £1,304,156 (2021 - £1,019,365).

There are no proposed dividends for the year ended 31 December 2022. Amounts paid in the year amounted to £NIL (31 December 2021 - £NIL).

Directors

The directors who served during the year were:

Mr A M Dumbreck

Mr M Bross

Mr F Dervieux

Future developments

Core operations remain healthy and the directors consider the business to be in a strong financial position to exploit future opportunities, working in collaboration with its sister businesses

Page 3

INNOVATE FOODS LIMITED

DIRECTORS' REPORT (CONTINUED)

FOR THE YEAR ENDED 31 DECEMBER 2022

Disclosure of information to auditors

Each of the persons who are directors at the time when this Directors' report is approved has confirmed that:

∙so far as the director is aware, there is no relevant audit information of which the Company's auditors are unaware, and

∙the director has taken all the steps that ought to have been taken as a director in order to be aware of any relevant audit information and to establish that the Company's auditors are aware of that information.

Post balance sheet events

There have been no significant events affecting the Company since the year end.

Auditors

The auditors, EQ Accountants LLP, 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.

Mr A M Dumbreck

Director

Date: 5 May 2023

Page 4

INNOVATE FOODS LIMITED

INDEPENDENT AUDITORS' REPORT TO THE MEMBERS OF INNOVATE FOODS LIMITED

Opinion

We have audited the financial statements of Innovate Foods Limited (the 'Company') for the year ended 31 December 2022, which comprise the Statement of comprehensive income, the Statement of financial position, the Statement of cash flows, 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).

In our opinion the financial statements:

∙give a true and fair view of the state of the Company's affairs as at 31 December 2022 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 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.

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 Company's ability to continue as a going concern for a period of at least twelve months from when the financial statements are authorised for issue.

Our responsibilities and the responsibilities of the directors with respect to going concern are described in the relevant sections of this report.

Other information

The other information comprises the information included in the Annual Report other than the financial statements and our 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.

Page 5

INNOVATE FOODS LIMITED

INDEPENDENT AUDITORS' REPORT TO THE MEMBERS OF INNOVATE FOODS LIMITED (CONTINUED)

Opinion on other matters prescribed by the Companies Act 2006

In our opinion, based on the work undertaken in the course of the audit:

∙the information given in the Strategic report and the Directors' report for the financial year for which the financial statements are prepared is consistent with the financial statements; and

∙the Strategic report and the Directors' report have been prepared in accordance with applicable legal requirements.

Matters on which we are required to report by exception

In 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.

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, 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 Directors' responsibilities statement set out on page 3, the directors are responsible for the preparation of the financial statements and for being satisfied that they give a true and fair view, and for such internal control as the directors determine is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.

In preparing the financial statements, the directors are responsible for assessing the 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.

Page 6

INNOVATE FOODS LIMITED

INDEPENDENT AUDITORS' REPORT TO THE MEMBERS OF INNOVATE FOODS LIMITED (CONTINUED)

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 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 gained an understanding of the legal and regulatory framework applicable to the company and the industry in
which it operates, and considered the risk of acts by the company that were contrary to applicable laws and
regulations, including fraud. We designed audit procedures to respond to the risk, recognising that 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.
We focussed on laws and regulations which could give rise to a material misstatement in the financial
statements, including, but not limited to, the Companies Act 2006 and UK tax legislation. Our tests included
agreeing the financial statement disclosures to underlying supporting documentation, enquiries with
management and enquiries of legal counsel. 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. We did not identify any key
audit matters relating to irregularities, including fraud. As in all our audits, we also addressed the risk of
management override of internal controls, including testing journals and evaluating

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.

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 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.

Mark Gibson (Senior statutory auditor)

for and on behalf of

EQ Accountants LLP

Chartered Accountants

Pentland House

Saltire Centre

Glenrothes

Fife

KY6 2AH

5 May 2023

Page 7

INNOVATE FOODS LIMITED

STATEMENT OF COMPREHENSIVE INCOME

FOR THE YEAR ENDED 31 DECEMBER 2022

	2022	2021
	£	£


Turnover	4	23,969,634	19,976,791
Cost of sales		(19,909,705)	(16,367,689)
Gross profit		4,059,929	3,609,102
Distribution costs		(1,122,516)	(889,806)
Administrative expenses		(1,308,986)	(1,487,703)
Other operating income	5	1,100	20,542
Operating profit	6	1,629,527	1,252,135
Interest receivable and similar income	9	146	60
Interest payable and similar expenses	10	9,062	(12,520)
Profit before tax		1,638,735	1,239,675
Tax on profit	11	(334,579)	(220,310)
Profit for the financial year		1,304,156	1,019,365

There was no other comprehensive income for 2022 (2021:£NIL).

The notes on pages 13 to 25 form part of these financial statements.

Page 8

INNOVATE FOODS LIMITED

REGISTERED NUMBER: SC116286

STATEMENT OF FINANCIAL POSITION

AS AT 31 DECEMBER 2022

		2022		2021
		£		£

Fixed assets
Tangible assets	12		1,328,374		1,816,379
			1,328,374		1,816,379
Current assets
Stocks	13	4,609,480		1,980,821
Debtors: amounts falling due within one year	14	7,428,274		4,493,373
Cash at bank and in hand	15	371,413		1,330,940
		12,409,167		7,805,134
Creditors: amounts falling due within one year	16	(5,661,084)		(2,794,532)
Net current assets			6,748,083		5,010,602
Total assets less current liabilities			8,076,457		6,826,981
Creditors: amounts falling due after more than one year	17		(343,559)		(379,529)
Provisions for liabilities
Deferred tax	20	(150,769)		(169,479)
			(150,769)		(169,479)
Net assets			7,582,129		6,277,973

Capital and reserves
Called up share capital	21	8,580	8,580
Profit and loss account	22	7,573,549	6,269,393
		7,582,129	6,277,973

The financial statements were approved and authorised for issue by the board and were signed on its behalf by:

Mr A M Dumbreck	Mr F Dervieux
Director	Director

Date: 5 May 2023

The notes on pages 13 to 25 form part of these financial statements.

Page 9

INNOVATE FOODS LIMITED

STATEMENT OF CHANGES IN EQUITY

FOR THE YEAR ENDED 31 DECEMBER 2022

	Called up share capital	Profit and loss account	Total equity
	£	£	£
At 1 January 2022	8,580	6,269,393	6,277,973

Profit for the year	-	1,304,156	1,304,156
At 31 December 2022	8,580	7,573,549	7,582,129

The notes on pages 13 to 25 form part of these financial statements.

STATEMENT OF CHANGES IN EQUITY

FOR THE YEAR ENDED 31 DECEMBER 2021

	Called up share capital	Profit and loss account	Total equity
	£	£	£
At 1 January 2021	8,580	5,250,028	5,258,608

Profit for the year	-	1,019,365	1,019,365
At 31 December 2021	8,580	6,269,393	6,277,973

The notes on pages 13 to 25 form part of these financial statements.

Page 10

INNOVATE FOODS LIMITED

STATEMENT OF CASH FLOWS

FOR THE YEAR ENDED 31 DECEMBER 2022

			2022	2021
			£	£

Cash flows from operating activities
Profit for the financial year	1,304,156	1,019,365
Adjustments for:
Depreciation of tangible assets	612,248	564,136
Government grants	-	(19,220)
Interest paid	(9,062)	12,520
Interest received	(146)	(60)
Taxation charge	334,579	220,310
(Increase) in stocks	(2,628,659)	(164,896)
(Increase) in debtors	(2,527,634)	(1,664,364)
Increase in creditors	1,569,080	438,829
Corporation tax (recovered)	(356,399)	(224,536)
Net cash generated from operating activities	(1,701,837)	182,084

Cash flows from investing activities
Purchase of tangible fixed assets	(124,243)	(552,239)
Government grants received	-	19,220
Interest received	146	60
HP interest paid	9,062	(12,520)
Net advances from group companies	825,654	334,961
Net cash from investing activities	710,619	(210,518)
Cash flows from financing activities
Repayment of/new finance leases	31,691	379,032
Net cash used in financing activities	31,691	379,032
Net (decrease)/increase in cash and cash equivalents	(959,527)	350,598
Cash and cash equivalents at beginning of year	1,330,940	980,342
Cash and cash equivalents at the end of year	371,413	1,330,940

Cash and cash equivalents at the end of year comprise:
Cash at bank and in hand	371,413	1,330,940

The notes on pages 13 to 25 form part of these financial statements.

Page 11

INNOVATE FOODS LIMITED

ANALYSIS OF NET DEBT

FOR THE YEAR ENDED 31 DECEMBER 2022


At 1 January 2022	Cash flows	Repayment of/(new) finance leases	At 31 December 2022
£	£	£	£

Cash at bank and in hand	1,330,940	(959,527)	-	371,413
Debt due within 1 year	(344,961)	(825,654)	-	(1,170,615)
Finance leases	(584,353)	-	(31,691)	(616,044)
	401,626	(1,785,181)	(31,691)	(1,415,246)

The notes on pages 13 to 25 form part of these financial statements.

Page 12

INNOVATE FOODS LIMITED

NOTES TO THE FINANCIAL STATEMENTS

FOR THE YEAR ENDED 31 DECEMBER 2022

1.	General information

Innovate Foods Limited is a private company, limited by shares, incorporated in Scotland; with registration number: SC116286. The registered office address is Barncraig, Boreland Road, Kirkcaldy, Fife, KY1 2YG.
The financial statements are presented in Sterling which is the functional currency of the company and rounded to the nearest £.
The principal activity of the company was that of producing and selling frozen food.

2.Accounting policies

2.1

Basis of preparation of financial statements

The financial statements have been prepared under the historical cost convention unless otherwise specified within these accounting policies and in accordance with Financial Reporting Standard 102, the Financial Reporting Standard applicable in the UK and the Republic of Ireland and the Companies Act 2006.

The preparation of financial statements in compliance with FRS 102 requires the use of certain critical accounting estimates. It also requires management to exercise judgment in applying the Company's accounting policies (see note 3).

The following principal accounting policies have been applied:

2.2

Foreign currency translation

Functional and presentation currency

The Company's functional and presentational currency is GBP.

Transactions and balances

Foreign currency transactions are translated into the functional currency using the spot exchange rates at the dates of the transactions.

At each period end foreign currency monetary items are translated using the closing rate. Non-monetary items measured at historical cost are translated using the exchange rate at the date of the transaction and non-monetary items measured at fair value are measured using the exchange rate when fair value was determined.

Page 13

INNOVATE FOODS LIMITED

NOTES TO THE FINANCIAL STATEMENTS

FOR THE YEAR ENDED 31 DECEMBER 2022

2.Accounting policies (continued)

2.3

Turnover

Turnover is recognised to the extent that it is probable that the economic benefits will flow to the Company 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:

Sale of goods

Turnover from the sale of goods is recognised when all of the following conditions are satisfied:

∙the Company has transferred the significant risks and rewards of ownership to the buyer;

∙the Company 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 Company 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.

2.4

Operating leases: the Company as lessee

Rentals paid under operating leases are charged to profit or loss on a straight-line basis over the lease term.

Benefits received and receivable as an incentive to sign an operating lease are recognised on a straight-line basis over the lease term, unless another systematic basis is representative of the time pattern of the lessee's benefit from the use of the leased asset.

2.5

Research and development

Research and development expenditure is written off in the year in which it is incurred.

2.6

Government grants

Grants are accounted under the accruals model as permitted by FRS 102. Grants relating to expenditure on tangible fixed assets are credited to profit or loss at the same rate as the depreciation on the assets to which the grant relates. The deferred element of grants is included in creditors as deferred income.
Grants of a revenue nature are recognised in the Statement of comprehensive income in the same period as the related expenditure.

2.7

Finance costs

Finance costs are charged to profit or loss over the term of the debt using the effective interest method so that the amount charged is at a constant rate on the carrying amount. Issue costs are initially recognised as a reduction in the proceeds of the associated capital instrument.

Page 14

INNOVATE FOODS LIMITED

NOTES TO THE FINANCIAL STATEMENTS

FOR THE YEAR ENDED 31 DECEMBER 2022

2.Accounting policies (continued)

2.8

Pensions

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 profit or loss when they fall due. Amounts not paid are shown in accruals as a liability in the Statement of financial position. The assets of the plan are held separately from the Company in independently administered funds.

2.9

Current and deferred taxation

The tax expense for the year comprises current and deferred tax. Tax is recognised in profit or loss except that a charge attributable to an item of income and expense recognised as other comprehensive income or to an item recognised directly in equity is also recognised in other comprehensive income or directly in equity respectively.

The current tax charge is calculated on the basis of tax rates and laws that have been enacted or substantively enacted by the reporting date in the countries where the Company operates and generates income.

Deferred tax balances are recognised in respect of all timing differences that have originated but not reversed by the reporting date, except that:

∙The recognition of deferred tax assets is limited to the extent that it is probable that they will be recovered against the reversal of deferred tax liabilities or other future taxable profits; and

∙Any deferred tax balances are reversed if and when all conditions for retaining associated tax allowances have been met.

Deferred tax balances are not recognised in respect of permanent differences except in respect of business combinations, when deferred tax is recognised on the differences between the fair values of assets acquired and the future tax deductions available for them and the differences between the fair values of liabilities acquired and the amount that will be assessed for tax. Deferred tax is determined using tax rates and laws that have been enacted or substantively enacted by the reporting date.

2.10

Tangible fixed assets

Tangible fixed assets under the cost model are stated at historical cost less accumulated depreciation and any accumulated impairment losses. Historical cost includes expenditure that is directly attributable to bringing the asset to the location and condition necessary for it to be capable of operating in the manner intended by management.

Page 15

INNOVATE FOODS LIMITED

NOTES TO THE FINANCIAL STATEMENTS

FOR THE YEAR ENDED 31 DECEMBER 2022

2.Accounting policies (continued)

2.10

Tangible fixed assets (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.

Depreciation is provided on the following basis:

Freehold property	-	4% straight line
Plant and machinery	-	20% straight line
Motor vehicles	-	25% straight line
Fixtures and fittings	-	15% to 33.3% straight line

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.

2.11

Impairment of fixed assets

Assets that are subject to depreciation are assessed at each reporting date to determine whether
there is any indication that the assets are impaired. Where there is any indication that an asset may
be impaired, the carrying value of the asset is tested for impairment. An impairment loss is
recognised for the amount by which the asset's carrying amount exceeds its recoverable amount.
The recoverable amount in the higher of an asset's fair value less costs to sell and value in use. For
the purposes of assessing impairment, assets are grouped at the lowest level for which there are
separately identifiable cash flows. Non-financial assets that have been previously impaired are
reviewed at each reporting date to assess whether there is any indication that the impairment losses
recognised in prior periods may no longer exist or may have decreased.

2.12

Stocks

Stocks are stated at the lower of cost and net realisable value, being the estimated selling price less costs to complete and sell. Cost is based on the cost of purchase on a first in, first out basis. Work in progress and finished goods include labour and attributable overheads.

At each reporting date, stocks are assessed for impairment. If stock is impaired, the carrying amount is reduced to its selling price less costs to complete and sell. The impairment loss is recognised immediately in profit or loss.

2.13

Debtors

Short-term debtors are measured at transaction price, less any impairment. Loans receivable are measured initially at fair value, net of transaction costs, and are measured subsequently at amortised cost using the effective interest method, less any impairment.

Page 16

INNOVATE FOODS LIMITED

NOTES TO THE FINANCIAL STATEMENTS

FOR THE YEAR ENDED 31 DECEMBER 2022

2.Accounting policies (continued)

2.14

Cash and cash equivalents

Cash is represented by cash in hand and deposits with financial institutions repayable without penalty on notice of not more than 24 hours. Cash equivalents are highly liquid investments that mature in no more than three months from the date of acquisition and that are readily convertible to known amounts of cash with insignificant risk of change in value.

In the Statement of cash flows, cash and cash equivalents are shown net of bank overdrafts that are repayable on demand and form an integral part of the Company's cash management.

2.15

Creditors

Short-term creditors are measured at the transaction price. Other financial liabilities, including bank loans, are measured initially at fair value, net of transaction costs, and are measured subsequently at amortised cost using the effective interest method.

2.16

Financial instruments

The Company only enters into basic financial instrument transactions that result in the recognition of financial assets and liabilities like trade and other debtors and creditors, loans from banks and other third parties, loans to related parties and investments in ordinary shares.

3.	Judgments in applying accounting policies and key sources of estimation uncertainty

The preparation of the financial statements required management to make several judgments and estimates. The most significant areas of estimation within the Company's financial statements relate to the valuation of stock and depreciation.
The directors review the valuation method on a regular basis to ensure that the carrying value of stock remains appropriate. Due consideration is given to amounts realised following the year end in relation to stock included in the financial statements at the year end.
The directors review depreciation rates on a regular basis to ensure that the policy rates remain appropriate and fairly charge the cost of fixed assets over their predicted useful lives for each specific category of fixed assets.

Turnover

The whole of the turnover is attributable to frozen food products.

Analysis of turnover by country of destination:

					2022	2021
					£	£

United Kingdom	21,613,752	17,224,198
Rest of Europe	193,910	969,971
Rest of the world	2,161,972	1,782,622
	23,969,634	19,976,791

Page 17

INNOVATE FOODS LIMITED

NOTES TO THE FINANCIAL STATEMENTS

FOR THE YEAR ENDED 31 DECEMBER 2022

5.	Other operating income
		2022	2021
		£	£

Other operating income	1,100	-
Net rents receivable	-	1,322
Government grants receivable	-	19,220
	1,100	20,542

Audit fees payable	9,492	9,492
Exchange differences	122,535	(52,045)
Other operating lease rentals	42,835	17,226
Depreciation of owned tangible fixed assets	313,001	251,826
Depreciation of tangible fixed assets held under finance lease	299,247	312,311

Wages and salaries	2,510,348	2,312,540
Social security costs	249,220	227,728
Cost of defined contribution scheme	154,526	171,256
	2,914,094	2,711,524

The average monthly number of employees, including the directors, during the year was as follows:

	2022	2021
	No.	No.

Production	65	64
Sales	3	4
Administration	30	19
Directors	3	1

	101	88

Page 18

INNOVATE FOODS LIMITED

NOTES TO THE FINANCIAL STATEMENTS

FOR THE YEAR ENDED 31 DECEMBER 2022

8.	Directors' remuneration
		2022	2021
		£	£

Directors' emoluments	107,718	120,000
Company contributions to defined contribution pension schemes	36,663	36,663
	144,381	156,663

During the year retirement benefits were accruing to 1 directors (2021 - 1) in respect of defined contribution pension schemes.

9.	Interest receivable
		2022	2021
		£	£

Other interest receivable

146

10.	Interest payable and similar expenses
		2022	2021
		£	£

Finance leases and hire purchase contracts

(9,062)

12,520

Corporation tax
Current tax on profits for the year	364,182	229,045
Adjustments in respect of previous periods	(10,893)	-
	353,289	229,045

Total current tax	353,289	229,045

Deferred tax
Origination and reversal of timing differences	(76,843)	(7,857)
Prior year adjustments	58,133	(878)
Total deferred tax	(18,710)	(8,735)


	Taxation on profit on ordinary activities	334,579	220,310

Page 19

INNOVATE FOODS LIMITED

NOTES TO THE FINANCIAL STATEMENTS

FOR THE YEAR ENDED 31 DECEMBER 2022

11.Taxation (continued)

Profit on ordinary activities before tax

1,638,735

1,239,675

Profit on ordinary activities multiplied by standard rate of corporation tax in the UK of 19% (2021 - 19%)	311,360	235,538
Effects of:
Expenses not deductible for tax purposes, other than goodwill amortisation and impairment	350	1,218
Capital allowances for year in excess of depreciation	963	963
Adjustments to tax charge in respect of prior periods	47,240	(878)
Additional super deduction capital allowances	(6,892)	(16,531)
Deferred tax expense relating to changes in tax rates	(18,442)	-
Total tax charge for the year	334,579	220,310

Factors that may affect future tax charges

There is an increase in the UK corporation tax rate from 19% to 25% (effective from 1 April 2023) which
was enacted on 11 March 2021. The 19% rate will continue to apply for companies with profits up to
£50,000.

Page 20

INNOVATE FOODS LIMITED

NOTES TO THE FINANCIAL STATEMENTS

FOR THE YEAR ENDED 31 DECEMBER 2022

12.	Tangible fixed assets

	Freehold property	Plant and machinery	Motor vehicles	Fixtures and fittings	Total
	£	£	£	£	£
Cost or valuation
At 1 January 2022	408,848	4,219,392	33,422	108,780	4,770,442
Additions	2,028	114,666	-	7,549	124,243
At 31 December 2022	410,876	4,334,058	33,422	116,329	4,894,685
Depreciation
At 1 January 2022	259,358	2,573,437	33,422	87,846	2,954,063
Charge for the year on owned assets	14,387	588,182	-	9,679	612,248
At 31 December 2022	273,745	3,161,619	33,422	97,525	3,566,311
Net book value
At 31 December 2022	137,131	1,172,439	-	18,804	1,328,374
At 31 December 2021	149,490	1,645,955	-	20,934	1,816,379

The net book value of assets held under finance leases or hire purchase contracts, included above, are as follows:
	2022	2021
	£	£


Plant and machinery	483,848	783,096
	483,848	783,096

13.	Stocks
		2022	2021
		£	£

Raw materials and consumables	1,751,184	949,666
Finished goods and goods for resale	2,740,090	644,321
Work in progress	118,206	386,834
	4,609,480	1,980,821

Page 21

INNOVATE FOODS LIMITED

NOTES TO THE FINANCIAL STATEMENTS

FOR THE YEAR ENDED 31 DECEMBER 2022

14.

Debtors

					2022	2021
					£	£


Trade debtors	6,502,171	4,273,009
Amounts owed by group undertakings	461,037	56,880
Other debtors	420,096	122,043
Prepayments and accrued income	44,970	41,441
	7,428,274	4,493,373

15.	Cash and cash equivalents
		2022	2021
		£	£

	Cash at bank and in hand	371,413	1,330,940

16.	Creditors: Amounts falling due within one year
		2022	2021
		£	£

Trade creditors	3,189,367	1,855,790
Amounts owed to group undertakings	1,621,652	391,841
Other taxation and social security	80,924	67,796
Obligations under finance lease and hire purchase contracts	272,485	204,824
Other creditors	394,197	71,513
Accruals and deferred income	102,459	202,768
	5,661,084	2,794,532

Secured loans
Obligations under finance leaase and hire purchase contracts of £272,485 (2021 - £204,824) are secured by the asset they relate to.

Page 22

INNOVATE FOODS LIMITED

NOTES TO THE FINANCIAL STATEMENTS

FOR THE YEAR ENDED 31 DECEMBER 2022

17.	Creditors: Amounts falling due after more than one year
		2022	2021
		£	£

	Net obligations under finance leases and hire purchase contracts	343,559	379,529

Secured loans
Obligations under finance lease and hire purchase contracts of £343,559 (2021 - £379,529) are secured by the assets they relate to.

Within one year	272,485	204,824
Between 1-5 years	343,559	379,529
	616,044	584,353

19.	Financial instruments
		2022	2021
		£	£

Financial assets
Financial assets measured at fair value through profit or loss	371,413	1,330,940
Financial assets measured at amortised cost	7,383,304	4,444,149
	7,754,717	5,775,089

	Financial liabilities
	Financial instruments measured at amortised cost	5,307,675	2,521,912

	Financial assets measured at fair value through profit or loss comprise cash at bank and in hand.
	Financial assets measured at amortised cost comprise trade debtors, other debtors and other amounts due from group undertakings
	Financial liabilities measured at amortised cost comprise trade creditors, accruals, other creditors and amounts owed to group undertakings.

Page 23

INNOVATE FOODS LIMITED

NOTES TO THE FINANCIAL STATEMENTS

FOR THE YEAR ENDED 31 DECEMBER 2022

20.	Deferred taxation

		2022
		£

	At beginning of year	(169,479)
	Charged to profit or loss	18,710
	At end of year	(150,769)

The provision for deferred taxation is made up as follows:
	2022	2021
	£	£

Accelerated capital allowances	(169,479)	(178,214)
Other timing differences	18,710	8,735
	(150,769)	(169,479)

The accelerated capital allowances are expected to reverse in subsequent period. The other timing differences will reverse in the next financial year. There are no expiry dates associated with either of these components.

21.	Share capital
		2022	2021
		£	£

Allotted, called up and fully paid

8,580 (2021 - 8,580) Ordinary shares of £1.00 each	8,580	8,580

22.

Reserves

Profit and loss account

The profit and loss account includes all current and prior period retained profits and losses.

23.	Contingent liabilities

A floating charge is in place in favour of Wilmington Trust SP Services (Frankfurt) GmbH as security agent pursuant to a EUR 122,500,000 facilities agreement (originally dated 31 January 2019 and subjected to future amendments) available to other group companies.

Page 24

INNOVATE FOODS LIMITED

NOTES TO THE FINANCIAL STATEMENTS

FOR THE YEAR ENDED 31 DECEMBER 2022

Contracted for but not provided in these financial statements

32,934

25.	Pension commitments

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 £154,526 (31 December 2021 - £171,256). Contributions totalling £19,618 (31 December 2021 - £40,067) were payable to the fund at the reporting date and are included in creditors.

Not later than 1 year	44,750	23,222
Later than 1 year and not later than 5 years	65,326	67,032
	110,076	90,254

27.	Related party transactions
	The company has taken the exemption available under FRS 102 not to disclosure transactions with other wholly owned members of the Group.

28.	Controlling party

The company is a wholly owned subsidiary of Frostkrone UK Limited, a company registered in Scotland. The ultimate parent is Mozzaxx Co-Invest GmbH & Co. KG, a limited partnership registered in Germany.

Page 25