Watts Farms Packers Limited - Period Ending 2022-09-30
Watts Farms Packers Limited - Period Ending 2022-09-30
Registration number:
Watts Farms Packers Limited
for the Year Ended 30 September 2022
Watts Farms Packers Limited
Contents
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Company Information |
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Strategic Report |
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Directors' Report |
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Statement of Directors' Responsibilities |
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Independent Auditor's Report |
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Profit and Loss Account |
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Balance Sheet |
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Statement of Changes in Equity |
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Statement of Cash Flows |
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Notes to the Financial Statements |
Watts Farms Packers Limited
Company Information
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Directors |
J Cottingham E Gray A M Gray M B Gray |
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Registered office |
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Auditors |
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Watts Farms Packers Limited
Strategic Report for the Year Ended 30 September 2022
The directors present their strategic report for the year ended 30 September 2022.
Principal activity
The principal activity of the company is the growing, packaging and distribution of fresh produce.
Watts Farms Packers Limited is a fresh produce company specialising in the growing, packing and distribution of leaf, herbs, legumes, asparagus, spinach and other vegetables. It farms over 600 hectares in Kent and Essex, distributing to retailers, wholesalers, processors and packers via its sister company, Watts Farms (Sales) Limited.
It supplies the majority of its products 52 weeks of the year. When Watts Farms Packers Limited does not have a UK grown product, it imports from both the fellow group company, Quinta Fresca, in Portugal and from its other growing partners abroad, most of whom have been trading with the company over many years.
Fair review of the business
2021/22 was an extremely challenging year with a lot of turbulence in the market which significantly impacted on the trading performance of the company. The unprecedented sudden rise in energy prices effected electricity and fuel dramatically affected profitability until customer contracts could be renegotiated.
The results reflect the very limited ability to pass costs on for the first 6 months of the financial year.
Trading conditions for 22/23 have stabliised and are improving as the business recovers. The business conducted a full review of customers and suppliers to focus on core profitable lines. This has been implemented and the company is on track to achieve a respectable result for 22/23. The business also continues to support Portugal, that has been instrumental in supplying the UK along with the other European business partners.
Key performance indicators
Management use a range of performance measures to monitor and manage the business. The main KPIs used to determine the progress and performance are set out below:
Turnover
Turnover has decreased by 9% to £22.8m from £25m in the previous year. This reflects the difficult trading conditions described in the 'Fair review' above.
Gross Profit
The company's gross profit as a percentage of turnover has fallen to 6.4% (2021: 7.8%).
Operating Loss
The operating loss was £1.73m (2021: £940k loss) due to the factors noted above.
Balance Sheet
The balance sheet shows that the company’s net assets have fallen from £1.07m in 2021 to net liabilities £677k at the end of 2022.
Watts Farms Packers Limited
Strategic Report for the Year Ended 30 September 2022
Principal risks and uncertainties
In common with other businesses operating in the farming sector, the company’s performance is susceptible to fluctuating producer prices, increased competition from imports and falling or static consumption of certain vegetable and salad produce. In addition, turnover for the individual farm can fluctuate from year to year depending on the range of crops grown, crop yields, the level of producer prices, the quality of each crop and wastage. Weather conditions also play a large part in determining yields, quality and demand, which is largely out of the control of the producer.
Higher borrowing costs in the wider group will increase the interest the business pays to our banking partner HSBC (who has supported Watts Farms throughout Covid and continues to do so). These additional costs have been factored into budgets for the coming year.
In the winter period, when there is limited UK supply of produce, the business relies on European suppliers to deliver produce to the UK. A significant proportion of these contracts are payable in Euros and therefore weakening of sterling against the Euro can be costly. This risk is being mitigated with currency hedging up to 6 months in the future.
In addition, by setting up a fellow group company in Portugal over the last 3 years, this has provided a natural hedge against any downside on sterling/Euro exchange rate. For 2022/23 we anticipate approximately 30% of winter produce to come from our Portuguese operation and this is likely to continue as operations continue to expand in Portugal. Also there has been a consolidation of the European supplier base that will lead to less complexity and more efficiencies (particularly logistics).
It is the directors’ view that the business and the wider group can withstand anticipated detrimental impacts and still have the resources to trade successfully over the coming 2022/23 year.
Approved by the Board on
J Cottingham
Director
Watts Farms Packers Limited
Directors' Report for the Year Ended 30 September 2022
The directors present their report and the financial statements for the year ended 30 September 2022.
Dividends
The directors do not recommend payment of a final dividend.
Director of the company
The directors who held office during the year were as follows:
Financial instruments
Objectives and policies
The company’s principal financial instruments include bank overdrafts, loans and hire purchase arrangements, the main purpose of which is to provide finance for its operations. In addition, the company has various other financial assets and liabilities such as trade debtors and trade creditors arising directly from operations.
Investment of cash surpluses and borrowings are made through banks and institutions which must fulfil credit rating criteria approved by the Board. All customers who wish to trade on credit terms are subject to credit verification procedures, and trade debtors are reviewed on a regular basis with provision made for doubtful debts when necessary.
Price risk, credit risk, liquidity risk and cash flow risk
The company operates a treasury function which is responsible for managing the liquidity, interest and currency risk associated with its activities.
The company manages its cash and borrowing requirements in order to maximise interest income and minimise interest expense, whilst ensuring it has sufficient liquid resources to meet the operating needs of the business.
The company is exposed to fair value interest rate risk on its fixed rate borrowings and cash flow interest rate risk on bank overdrafts and loans.
Future developments and post balance sheet events
It is expected the company will continue to operate within the scope of its existing activities for the foreseeable future. Further details are provided in the ‘Fair Review’ section of the Strategic Report.
Watts Farms Packers Limited
Directors' Report for the Year Ended 30 September 2022
Disclosure of information to the auditors
Each director has taken steps that they ought to have taken as a director in order to make themselves aware of any relevant audit information and to establish that the company's auditors are aware of that information. The directors confirm that there is no relevant information that they know of and of which they know the auditors are unaware.
Approved by the Board on
J Cottingham
Director
Watts Farms Packers Limited
Statement of Directors' Responsibilities
The directors are responsible for preparing the Annual 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 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 apply them consistently; |
• | make judgements 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 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.
Watts Farms Packers Limited
Independent Auditor's Report to the Members of Watts Farms Packers Limited
Opinion
We have audited the financial statements of Watts Farms Packers Limited (the 'company') for the year ended 30 September 2022, which comprise the Profit and Loss Account, Balance Sheet, Statement of Changes in Equity, Statement of Cash Flows, and 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 September 2022 and of its loss 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 Auditor’s 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
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 entity'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.
Watts Farms Packers Limited
Independent Auditor's Report to the Members of Watts Farms Packers Limited
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.
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.
Opinion on other matter prescribed by the Companies Act 2006
In our opinion, based on the work undertaken in the course of the audit:
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the information given in the Strategic Report and Directors' Report for the financial year for which the financial statements are prepared is consistent with the financial statements; and |
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the Strategic Report and 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 our 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 and the Directors' Report.
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 6), 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.
Watts Farms Packers Limited
Independent Auditor's Report to the Members of Watts Farms Packers Limited
Auditor 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 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 extent to which our procedures are capable of detecting irregularities, including fraud is detailed below:
Discussions were held with, and enquiries made of, management and those charged with governance with a view to identifying those laws and regulations that could be expected to have a material impact on the financial statements. During the engagement team briefing, the outcomes of these discussions and enquiries were shared with the team, as well as consideration as to where and how fraud may occur in the entity.
The extent to which our procedures are capable of detecting irregularities, including fraud is detailed below:
Discussions were held with, and enquiries made of, management and those charged with governance with a view to identifying those laws and regulations that could be expected to have a material impact on the financial statements. During the engagement team briefing, the outcomes of these discussions and enquiries were shared with the team, as well as consideration as to where and how fraud may occur in the entity.
The following laws and regulations were identified as being of significance to the entity:
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those laws and regulations considered to have a direct effect on the financial statements include UK financial reporting standards, Company Law, Tax and Pensions legislation, and distributable profits legislation. |
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those laws and regulations for which non-compliance may be fundamental to the operating aspects of the business and therefore may have a material effect on the financial statements include food safety legislation and various industry standards. |
Watts Farms Packers Limited
Independent Auditor's Report to the Members of Watts Farms Packers Limited
Audit procedures undertaken in response to the potential risks relating to irregularities (which include fraud and non-compliance with laws and regulations) comprised of: inquiries of management and those charged with governance as to whether the entity complies with such laws and regulations; enquiries with the same concerning any actual or potential litigation or claims; inspection of relevant legal correspondence; review of board minutes; testing the appropriateness of entries in the nominal ledger, including journal entries; reviewing transactions around the end of the reporting period; and the performance of analytical procedures to identify unexpected movements in account balances which may be indicative of fraud.
No instances of material non-compliance were identified. However, the likelihood of detecting irregularities, including fraud, is limited by the inherent difficulty in detecting irregularities, the effectiveness of the entity’s controls, and the nature, timing and extent of the audit procedures performed. Irregularities that result from fraud might be inherently more difficult to detect than irregularities that result from error. As explained above, there is an unavoidable risk that material misstatements may not be detected, even though the audit has been planned and performed in accordance with ISAs (UK).
A further description of our responsibilities is available on the Financial Reporting Council’s website at: 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 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 auditor’s report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the company and the company’s members as a body, for our audit work, for this report, or for the opinions we have formed.
For and on behalf of
Nexus House
2 Cray Road
Kent
DA14 5DA
Watts Farms Packers Limited
Profit and Loss Account for the Year Ended 30 September 2022
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Note |
2022 |
2021 |
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Turnover |
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Cost of sales |
( |
( |
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Gross profit |
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|
|
|
Administrative expenses |
( |
( |
|
|
Other operating income |
|
|
|
|
Operating loss |
( |
( |
|
|
Interest payable and similar charges |
( |
( |
|
|
Exceptional items |
- |
(616,362) |
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|
Loss before tax |
( |
( |
|
|
Taxation |
- |
|
|
|
Loss for the financial year |
( |
( |
No Statement of Comprehensive Income has been presented as there is no movement through other comprehensive income for the year.
Watts Farms Packers Limited
(Registration number: 06191865)
Balance Sheet as at 30 September 2022
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Note |
2022 |
2021 |
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Fixed assets |
|||
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Tangible assets |
|
|
|
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Current assets |
|||
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Stocks |
|
|
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Debtors |
|
|
|
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Cash at bank and in hand |
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|
|
|
|
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||
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Creditors: Amounts falling due within one year |
( |
( |
|
|
Net current (liabilities)/assets |
( |
|
|
|
Total assets less current liabilities |
( |
|
|
|
Creditors: Amounts falling due after more than one year |
- |
( |
|
|
Net (liabilities)/assets |
( |
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|
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Capital and reserves |
|||
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Called up share capital |
100 |
100 |
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Share premium reserve |
171,839 |
171,839 |
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Profit and loss account |
(849,254) |
895,753 |
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Total equity |
(677,315) |
1,067,692 |
Approved and authorised by the
J Cottingham
Director
Watts Farms Packers Limited
Statement of Changes in Equity for the Year Ended 30 September 2022
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Share capital |
Share premium |
Profit and loss account |
Total |
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At 1 October 2021 |
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|
|
|
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Loss for the year |
- |
- |
( |
( |
|
Total comprehensive income |
- |
- |
( |
( |
|
At 30 September 2022 |
|
|
( |
( |
|
Share capital |
Share premium |
Profit and loss account |
Total |
|
|
At 1 October 2020 |
|
|
|
|
|
Loss for the year |
- |
- |
( |
( |
|
Total comprehensive income |
- |
- |
( |
( |
|
Dividends |
- |
- |
( |
( |
|
At 30 September 2021 |
|
|
|
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Watts Farms Packers Limited
Statement of Cash Flows for the Year Ended 30 September 2022
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Note |
2022 |
2021 |
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Cash flows from operating activities |
|||
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Loss for the year |
( |
( |
|
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Adjustments to cash flows from non-cash items |
|||
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Depreciation and amortisation |
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|
|
|
(Profit)/loss on disposal of property plant and equipment |
( |
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Finance costs |
|
|
|
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Corporation tax |
- |
( |
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|
( |
( |
||
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Working capital adjustments |
|||
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Decrease/(increase) in stock |
|
( |
|
|
(Increase)/decrease in trade and other debtors |
( |
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Increase/(decrease) in trade and other creditors |
|
( |
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|
Cash generated from operations |
|
|
|
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Corporation taxes received |
- |
|
|
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Net cash flow from operating activities |
|
|
|
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Cash flows from investing activities |
|||
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Acquisitions of property plant and equipment |
( |
( |
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Proceeds from sale of property plant and equipment |
|
|
|
|
Net cash flows from investing activities |
( |
( |
|
|
Cash flows from financing activities |
|||
|
Interest paid |
( |
( |
|
|
Payments to finance lease creditors |
( |
( |
|
|
Dividends paid |
- |
( |
|
|
Net cash flows from financing activities |
( |
( |
|
|
Net increase/(decrease) in cash and cash equivalents |
|
( |
|
|
Cash and cash equivalents at 1 October |
|
|
|
|
Cash and cash equivalents at 30 September |
73,683 |
41,386 |
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Watts Farms Packers Limited
Notes to the Financial Statements for the Year Ended 30 September 2022
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General information |
The company is a private company limited by share capital, incorporated in England.
The principal activity of the company is disclosed in the Strategic Report.
The address of its registered office and principal place of business is:
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Accounting policies |
Basis of preparation
These financial statements have been prepared in accordance with applicable United Kingdom accounting standards, including Financial Reporting Standard 102 - 'The Financial Reporting standard applicable in the United Kingdom and Republic of Ireland' ('FRS 102'), and with the Companies Act 2006.
These financial statements have been prepared using the historical cost convention.
Summary of significant accounting policies and key accounting estimates
The principal accounting policies applied in the preparation of these financial statements are set out below. These policies have been consistently applied to all the years presented, unless otherwise stated.
Going concern
The directors are of the view that the budgets and forecasts for the coming financial year are realistic and achievable, and the company will finish the current financial year in a significantly better trading position then the previous 2 years.
The financial statements have been prepared on a going concern basis which assumes that the company will continue in operational existence for the foreseeable future. This assumption is based on the company’s ability to manage cash flows and settle short term liabilities as they fall due using the various financial resources at its disposal, including its facilities with HSBC and via the wider group. Our projections factor in the principal risks and uncertainties detailed in the Strategic Report. HSBC has confirmed it will provide a flexible draw down facility (via the parent company) until 31 December 2023.. In addition, the wider group has a significant asset base which can provide additional leverage when required. On this basis the financial statements have therefore been prepared on a going concern basis.
Watts Farms Packers Limited
Notes to the Financial Statements for the Year Ended 30 September 2022
Critical accounting judgements and key sources of estimation uncertainty
In the application of the company's accounting policies management is required to make judgements, estimates and assumptions about the carrying values of assets and liabilities that are not readily apparent from other sources. The estimates and underlying assumptions are based on historic experience and other factors that are considered to be relevant. Actual results may differ from these estimates. |
Specifically, judgements and estimates are required in determining the useful economic lives of fixed assets, the valuation of stock and the recoverability of trade debtors. |
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 if the revision affects only that period, or in the period of the revision and future periods if the revision affects both current and future periods. |
Revenue recognition
Turnover comprises the fair value of the consideration received or receivable for the sale of goods and provision of services in the ordinary course of the company’s activities. Turnover is shown net of sales/value added tax, returns, rebates and discounts and after eliminating sales within the company.
The company recognises revenue when:
- the amount of revenue can be reliably measured;
- it is probable that future economic benefits will flow to the entity;
- and specific criteria have been met for each of the company's activities.
Government grants
The company has adopted the accrual model for accounting for government grants. Grants relating to revenue are recognised in income on a systematic basis over the same period as the related costs for which the grant is intended to compensate. Grants relating to assets are recognised in income on a systematic basis over the expected useful life of the asset.
Defined contribution pension obligation
A defined contribution plan is a pension plan under which fixed contributions are paid into a pension fund and the company has no legal or constructive obligation to pay further contributions even if the fund does not hold sufficient assets to pay all employees the benefits relating to employee service in the current and prior periods.
Contributions to defined contribution plans are recognised as employee benefit expense when they are due. If contribution payments exceed the contribution due for service, the excess is recognised as a prepayment.
Foreign currency transactions and balances
Non-monetary items measured in terms of historical cost in a foreign currency are not retranslated.
Watts Farms Packers Limited
Notes to the Financial Statements for the Year Ended 30 September 2022
Tax
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 taxable income.
Current or deferred tax for the year is recognised in profit or loss, except when they relate to items that are recognised in other comprehensive income or directly in equity, in which case, the current and deferred tax is also recognised in other comprehensive income or directly in equity.
Enhanced tax relief claims in relation to research and development are made, time permitting, in the same accounting period for which the eligible expenditure is identified. This means the claims will be matched to the correct accounting period where possible. Otherwise, tax recoverable in relation to retrospective claims are recognised in the accounting period when those claims are submitted to HMRC.
Deferred tax is recognised on temporary differences arising between the tax bases of assets and liabilities and their carrying amounts in the financial statements and on unused tax losses or tax credits in the company. Deferred tax is determined using tax rates and laws that have been enacted or substantively enacted by the reporting date.
Tangible assets
Tangible assets are stated in the balance sheet at cost, less any subsequent accumulated depreciation and subsequent accumulated impairment losses.
The cost of tangible assets includes directly attributable incremental costs incurred in their acquisition and installation.
Depreciation
Depreciation is charged so as to write off the cost of assets, over their estimated useful lives, as follows:
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Asset class |
Depreciation method and rate |
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Other property, plant and equipment |
3 - 15 years straight line |
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Motor vehicles |
3-5 years straight line |
Goodwill
Goodwill is amortised over its useful life, which shall not exceed 5 years if a reliable estimate of the useful life cannot be made.
Amortisation
Amortisation is provided on intangible assets so as to write off the cost, less any estimated residual value, over their useful life as follows:
|
Asset class |
Amortisation method and rate |
|
Goodwill |
5 years straight line |
Watts Farms Packers Limited
Notes to the Financial Statements for the Year Ended 30 September 2022
Financial instruments
Classification
Financial assets are classified as financial assets at fair value through profit or loss, loans and debtors, held-to-maturity investments, available-for-sale financial assets, or as derivatives designated as hedging instruments in an effective hedge, as appropriate. The company determines the classification of its financial assets at initial recognition.
Financial liabilities are classified as financial liabilities at fair value through profit and loss, loans and borrowings, trade and other creditors, or as derivatives designated as hedging instruments in an effective hedge, as appropriate. The company determines the classification of its financial liabilities at initial recognition.
Recognition and measurement
Impairment
Cash and cash equivalents
Cash and cash equivalents comprise cash on hand and call deposits, and other short-term highly liquid investments that are readily convertible to a known amount of cash and are subject to an insignificant risk of change in value.
Trade and other debtors
Trade and other debtors are recognised initially at the transaction price. They are subsequently measured at amortised cost using the effective interest method, less provision for impairment, except where the effect of discounting would be immaterial. In such cases debtors are stated at transaction price less impairment losses. A provision for the impairment of trade debtors is established when there is objective evidence that the company will not be able to collect all amounts due according to the original terms of the transaction.
Watts Farms Packers Limited
Notes to the Financial Statements for the Year Ended 30 September 2022
Stocks
Stocks are stated at the lower of cost and estimated selling price less costs to complete and sell. Cost is determined using the first-in, first-out (FIFO) method.
The cost of growing and harvested crops comprises direct materials and, where applicable, direct labour costs and those overheads that have been incurred in bringing the inventories to their present location and condition. The cost of raw materials and consumables (mainly packaging, fertilisers and chemicals) comprises the price charged by suppliers. At each reporting date, stocks are assessed for impairment. If stocks are 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.
Perennial crops such as asparagus, chives, mint etc. can be harvested multiple times over a number of years. Such crops have a first year production cost which in turn becomes a ‘standing cost’ that is ‘depreciated’ on a straight line basis over the expected useful life of each perennial crop type. Such crops are biological assets under FRS 102 where the cost method has been adopted.
Trade and other creditors
Trade and other creditors are recognised initially at the transaction price. They are subsequently measured at amortised cost using the effective interest method, except where the effect of discounting would be immaterial. In such cases creditors are stated at transaction price.
Borrowings
Interest-bearing borrowings are initially recorded at fair value, net of transaction costs. Interest-bearing borrowings are subsequently carried at amortised cost, with the difference between the proceeds, net of transaction costs, and the amount due on redemption being recognised as a charge to the Profit and Loss Account over the period of the relevant borrowing.
Interest expense is recognised on the basis of the effective interest method and is included in interest payable and similar charges.
Borrowings are classified as current liabilities unless the company has an unconditional right to defer settlement of the liability for at least twelve months after the reporting date.
Watts Farms Packers Limited
Notes to the Financial Statements for the Year Ended 30 September 2022
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 or loss on a straight-line basis over the period of the lease.
Leases are classified as finance leases whenever the terms of the lease transfer substantially all the risks and rewards of ownership to the lessee.
Assets held under finance leases are recognised at the lower of their fair value at inception of the lease and the present value of the minimum lease payments. These assets are depreciated on a straight-line basis over the shorter of the useful life of the asset and the lease term. The corresponding liability to the lessor is included in the Balance Sheet as a finance lease obligation.
Lease payments are apportioned between finance costs in the Profit and Loss Account and reduction of the lease obligation so as to achieve a constant periodic rate of interest on the remaining balance of the liability.
Share capital
Ordinary shares are classified as equity. Equity instruments are measured at the fair value of the cash or other resources received or receivable, net of the direct costs of issuing the equity instruments. If payment is deferred and the time value of money is material, the initial measurement is on a present value basis.
Dividends
Dividend distributions to the company’s shareholders are recognised as a liability in the financial statements in the reporting period in which the dividends are declared.
Exceptional items
Exceptional items are non recurring items of a size or nature that require separate identification in the accounts in order to provide a true and fair view. Exceptional items are charged to the profit and loss account either before or after operating profit depending on whether they affect the company’s operating activities.
|
Revenue |
The analysis of the company's revenue for the year from continuing operations is as follows:
|
2022 |
2021 |
|
|
Sale of goods |
|
|
|
Other revenue |
|
|
|
|
|
The analysis of the company's revenue for the year by market is as follows:
Watts Farms Packers Limited
Notes to the Financial Statements for the Year Ended 30 September 2022
|
2022 |
2021 |
|
|
UK |
|
|
|
Other operating income |
The analysis of the company's other operating income for the year is as follows:
|
2022 |
2021 |
|
|
Government grants |
|
|
|
Rental income |
|
|
|
|
|
|
Operating loss |
Arrived at after charging/(crediting)
|
2022 |
2021 |
|
|
Depreciation |
|
|
|
Loss/(Profit) on disposal of property, plant and equipment |
( |
|
Watts Farms Packers Limited
Notes to the Financial Statements for the Year Ended 30 September 2022
|
Exceptional items |
Arrived at after charging/(crediting)
|
2022 |
2021 |
|
|
Exceptional income |
- |
( |
|
Exceptional cost |
- |
|
Exceptional income of £Nil (2021: £63,638) relates to settlement of long standing disputes surrounding historical grants for agricultural relief that were withheld.
Exceptional cost of £Nil (2021: £680,000) relates to the waiver of a loan due from group undertakings.
|
Interest payable and similar expenses |
|
2022 |
2021 |
|
|
Hire purchase interest |
|
|
|
Staff costs |
The aggregate payroll costs (including directors' remuneration) were as follows:
|
2022 |
2021 |
|
|
Wages and salaries |
|
|
|
Social security costs |
|
|
|
Pension costs, defined contribution scheme |
|
|
|
|
|
The average number of persons employed by the company (including directors) during the year, analysed by category was as follows:
|
2022 |
2021 |
|
|
Direct staff |
|
|
|
Administration and support |
|
|
|
|
|
Watts Farms Packers Limited
Notes to the Financial Statements for the Year Ended 30 September 2022
|
Directors' remuneration |
The directors' remuneration for the year was as follows:
|
2022 |
2021 |
|
|
Remuneration |
|
|
|
Auditors' remuneration |
|
2022 |
2021 |
|
|
Audit of the financial statements |
|
|
|
Taxation |
Tax charged/(credited) in the profit and loss account
|
2022 |
2021 |
|
|
Deferred taxation |
||
|
Arising from origination and reversal of timing differences |
- |
( |
The tax on profit before tax for the year is higher than the standard rate of corporation tax in the UK (2021 - higher than the standard rate of corporation tax in the UK) of
The differences are reconciled below:
|
2022 |
2021 |
|
|
Loss before tax |
( |
( |
|
Corporation tax at standard rate |
( |
( |
|
Effect of expense not deductible in determining taxable profit (tax loss) |
|
|
|
Effect of tax losses |
|
|
|
Deferred tax credit |
- |
( |
|
Tax decrease from effect of capital allowances and depreciation |
( |
( |
|
Total tax credit |
- |
( |
Watts Farms Packers Limited
Notes to the Financial Statements for the Year Ended 30 September 2022
Deferred tax
Deferred tax assets and liabilities
|
2022 |
Liability |
|
Difference between accumulated depreciation and capital allowances |
|
|
Deferred tax on losses not utilised |
( |
|
- |
|
2021 |
Liability |
|
Difference between accumulated depreciation and capital allowances |
|
|
Deferred tax on losses not utilised |
( |
|
- |
The deferred tax balance is measured at 25% (2021: 25%).
Based on current capital investment plans the company expects future timing differences between depreciation and capital allowances to remain at a similar level to the current year.
The company has unused tax losses of £2.2m for which a deferred tax asset is recognised on the balance of losses necessary to offset against the deferred tax liability in related to accelerated captial allowances.
|
Intangible assets |
|
Goodwill |
Total |
|
|
Cost or valuation |
||
|
At 1 October 2021 |
|
|
|
At 30 September 2022 |
|
|
|
Amortisation |
||
|
At 1 October 2021 |
|
|
|
At 30 September 2022 |
|
|
|
Carrying amount |
||
|
At 30 September 2022 |
- |
- |
|
At 30 September 2021 |
- |
- |
Watts Farms Packers Limited
Notes to the Financial Statements for the Year Ended 30 September 2022
|
Tangible assets |
|
Motor vehicles |
Other property, plant and equipment |
Total |
|
|
Cost or valuation |
|||
|
At 1 October 2021 |
|
|
|
|
Additions |
|
|
|
|
Disposals |
( |
- |
( |
|
At 30 September 2022 |
|
|
|
|
Depreciation |
|||
|
At 1 October 2021 |
|
|
|
|
Charge for the year |
|
|
|
|
Eliminated on disposal |
( |
- |
( |
|
At 30 September 2022 |
|
|
|
|
Carrying amount |
|||
|
At 30 September 2022 |
|
|
|
|
At 30 September 2021 |
|
|
|
Assets held under finance leases and hire purchase contracts
The net carrying amount of tangible assets includes the following amounts in respect of assets held under finance leases and hire purchase contracts:
|
2022 |
2021 |
|
|
Motor vehicles |
- |
- |
|
Plant and equipment |
76,402 |
96,587 |
|
76,402 |
96,587 |
|
Stocks |
|
2022 |
2021 |
|
|
Goods for resale |
|
|
|
Growing and harvested crops |
|
|
|
Raw materials and consumables |
|
|
|
|
|
Watts Farms Packers Limited
Notes to the Financial Statements for the Year Ended 30 September 2022
Growing and harvested crops include biological assets (i.e. perennial crops such as asparagus, chives and mint). Perennials had a carrying value at the beginning of the year of £310,503, there were new plantings of £38,421 less depreciation of £128,926, leaving a carrying value at the year-end of £219,998.
|
Debtors |
|
2022 |
2021 |
|
|
Trade debtors |
|
|
|
Amounts due from group undertakings |
|
|
|
Other debtors |
|
|
|
Prepayments |
|
|
|
Total current trade and other debtors |
|
|
|
Cash and cash equivalents |
|
2022 |
2021 |
|
|
Cash on hand |
|
|
|
Cash at bank |
|
|
|
|
|
|
Creditors |
|
Note |
2022 |
2021 |
|
|
Due within one year |
|||
|
Loans and borrowings |
|
|
|
|
Trade creditors |
|
|
|
|
Amounts due to group undertakings |
|
|
|
|
Social security and other taxes |
|
|
|
|
Other creditors |
|
|
|
|
Accruals |
|
|
|
|
|
|
||
|
Due after one year |
|||
|
Loans and borrowings |
- |
|
Watts Farms Packers Limited
Notes to the Financial Statements for the Year Ended 30 September 2022
|
Loans and borrowings |
|
2022 |
2021 |
|
|
Non-current loans and borrowings |
||
|
Hire purchase liabilities |
- |
|
Other borrowings
Hire purchase and finance lease agreements are repayable in monthly instalments under normal commercial terms. The liabilities are secured against the assets concerned.
|
2022 |
2021 |
|
|
Current loans and borrowings |
||
|
Hire purchase liabilities |
|
|
|
Obligations under leases and hire purchase contracts |
Hire purchase contracts
The total of future minimum lease payments is as follows:
|
2022 |
2021 |
|
|
Not later than one year |
|
|
|
Later than one year and not later than five years |
- |
|
|
|
|
Operating leases
The total of future minimum lease payments is as follows:
|
2022 |
2021 |
|
|
Not later than one year |
|
|
|
Later than one year and not later than five years |
|
|
|
Later than five years |
|
|
|
|
|
The amount of non-cancellable operating lease payments recognised as an expense during the year was £
Watts Farms Packers Limited
Notes to the Financial Statements for the Year Ended 30 September 2022
|
Share capital |
Allotted, called up and fully paid shares
|
2022 |
2021 |
|||
|
No. |
£ |
No. |
£ |
|
|
|
|
100 |
|
100 |
|
Pension and other schemes |
Defined contribution pension scheme
The company operates a defined contribution pension scheme. The pension cost charge for the year represents contributions payable by the company to the scheme and amounted to £
|
Dividends |
|
2022 |
2021 |
|||
|
£ |
£ |
|||
|
Interim dividend of £Nil (2021 - £ |
- |
440,000 |
||
|
Analysis of changes in net debt |
|
At 1 October 2021 |
Financing cash flows |
At 30 September 2022 |
|
|
Cash and cash equivalents |
|||
|
Cash |
41,386 |
32,297 |
73,683 |
|
Borrowings |
|||
|
Finance lease liabilities |
(154,301) |
111,168 |
(43,133) |
|
( |
|
|
|
|
|
|||
Watts Farms Packers Limited
Notes to the Financial Statements for the Year Ended 30 September 2022
|
Contingent liabilities |
The company's bank borrowing is subject to a cross guarantee and debenture between Watts Farms Fresh Produce Holdings Limited, Watts Farms (Sales) Limited, Watts Farms Catering Limited & Watts Farms Packers Limited dated 21 February 2019. The amount guaranteed is £2,097,821 (2021: £1,346,942).
|
Related party transactions |
The company has taken advantage of the exemption in FRS 102 33.1A "Related Party Disclosures" from disclosing transactions with other members of the group.
|
Parent and ultimate parent undertaking |
The company's immediate parent is