The directors present the strategic report for the year ended 31 May 2020.
Foods
The company has a 50% interest in Dartmouth Holdings Limited and its subsidiary undertaking, Dartmouth Foods Limited.
Dartmouth Foods Limited is a processor of poultry products to the retail and business-to-business sector.
Turnover and net profit have both decreased this year with net profit before tax at 1.2% of turnover (2019 - 2.7%). With a large portion of sales being to the food-to-go market, the initial period of lockdown had a negative impact on sales, resulting in the drop in turnover for the months of April and May 2020. Raw material usage and labour have decreased against sales over the period with the gross profit margin at 24.6% (2019 - 20.6%). Following the release of the remaining grant income the profit before tax is £168,895 (2019 - £410,378).
Net assets have increased slightly on the prior year following a year of profit with no dividends being paid.
Dartmouth Foods Limited plans to continue its focus on becoming the leader in cooked duck by consistently providing an authentic premium product for its customers. It is in the process of research and development to support this. As always quality is at the heart of our products and the company continues to maintain the highest standards as evidenced by the BRC accreditation and consistently high customer audit results.
Following the impact of the Covid-19 on the food-to-go market the company is looking to expand our offering to other markets. In order to to help in this ambition a new MD started in September 2020 to dive the strategic objectives forward.
Dartmouth Foods Limited continues to monitor its impact on the environment, maintaining good working relationships with relevant bodies.
Property
During the year investment in ongoing projects continues in three main areas: sister companies within the Faccenda Holdings group, properties specially purchased for development in the residential sector, and joint ventures with land owners in the commercial property sector.
During the year Faccenda Property Limited made one major property sale. Our joint ventures continued to develop with steady progress being made on planning applications and permissions to unlock value in these projects.
The net assets of Faccenda Property Limited and the joint venture partners as at 31 May 2020 were £15,853,467.
Farms
The company has an 100% interest in Faccenda Farms Limited.
The turnover of Faccenda Farms Limited for the year ended 31 May 2020 was £1,534,404 with profit before tax of £13,690.
The net assets of Faccenda Farms Limited as at 31 May 2020 were £36,723,818.
USA operations
The company has a 51% interest in Red Deer Capital Inc. and its subsidiary undertakings.
The turnover of the USA operations for the year ended 31 May 2020 was £28,754,845 with a gross profit of £10,544,715 and profit before tax of £1,163,638.
The net assets of Red Deer Capital Inc. as at 31 May 2020 were £12,289,415.
The most significant risks and uncertainties faced by the group are consistent with the rest of the sectors in which it operates:
Commodity prices
With ever-increasing global demand and unsettled worldwide economic conditions, we can expect market volatility to continue in the future. We continue to carefully monitor input prices and work closely with customers to reduce the impact of volatile market movements.
Food safety
Food safety remains a high priority. The risk of food scares is mitigated by ensuring raw materials are traceable to source and that manufacturing, storage and distribution systems are continually monitored by experienced and highly qualified technical teams. These systems will ensure our continued reputation for producing to the highest standards.
Ongoing work to reduce the prevalence of campylobacter in poultry products continues to pay dividends with recorded levels now consistently below the targets set by customers and the Foods Standard Agency. Further process improvements are planned for the year ahead
Disease
As a responsible agri-business, the health and welfare of our livestock are a high priority. Experienced, trained management are always on hand to monitor bird health with the support of qualified veterinary advisors. Faccenda are committed to using antibiotics only when it is advised by a veterinary surgeon and only when all other options to protect bird health and welfare have been considered. Total antibiotic usage is significantly down year on year.
Reportable disease such as avian influenza remains a potential risk to ongoing supply and Faccenda operates bio-security measures to mitigate this risk. It has a large number of farming facilities surrounding our processing operations spread over wide geographical areas within the UK
Site safety
Site safety remains a high priority. Construction sites remain dangerous places of work and require the utmost application of health and safety practices.
Legislation
New or proposed legislation governing all aspects of the business is reviewed routinely. The business is committed to responding positively to new regulations and ensures that its views are expressed both during consultation exercises and through the British Poultry Council.
Insurances and risk management
The group faces the risk of incidents such as major fire, which may result in significant and prolonged disruption to its operating facilities. Business continuity plans across the group’s manufacturing and agricultural facilities, plus appropriate insurance cover, are in place to mitigate any loss.
The group continues to train staff at all levels, as well as ensuring that our subcontractors adhere to the same stringent practices operated by our own management. This limits the opportunity for incidents. We also make sure that all insurances are relevant for our ongoing projects.
Supplier contracts
It is imperative that the company is able to source its high quality raw materials, goods and services at the most competitive prices and to this end the company has numerous supply contracts in place. Contracts are collectively essential to the business but no single contract or supplier is critical.
Defined benefit pension scheme
The group's defined benefit pension scheme is closed to new members, with employees being offered the opportunity to join a defined contribution pension scheme. The defined benefit scheme remains a risk, with continued exposure to investment and mortality risk.
Covid-19
A key risk to the future continued going concern of the company are the risks and uncertainties as to the impact of the Covid-19 outbreak in the UK. As at the date of approving these financial statements the directors have assessed the impact of Covid-19 and are satisfied that these financial statements continue to be prepared on a going concern basis.
Key performance indicators
The directors consider the key performance indicators to be:
Triggered by Covid-19, the UK is likely to experience an economic downturn which will be deeper and more divisive than previous recessions in 2008 and 1992 because of its reliance on the service sector, and the disproportionate impact of unemployment on young people.
Political and economic uncertainty in the UK surrounding the terms under which the UK will leave the European Union will be a factor in the year ahead.
We remain confident in the management team, our well-invested facilities and our skilled employees to meet the challenges ahead.
Section 172 of the Companies Act 2006 requires a director of a company to act in the way he or she considers, in good faith, would most likely promote the success of the company for the benefit of its members as a whole. In doing this, section 172 requires a director to have regard, amongst other matters, to the:
likely consequences of any decisions in the long-term;
interests of the company’s employees;
need to foster the company’s business relationships with suppliers, customers and others;
impact of the company’s operations on the community and environment;
desirability of the company maintaining a reputation for high standards of business conduct; and
need to act fairly as between members of the company.
The directors also take into account the views and interests of a wider set of stakeholders when making decisions, During the year the company received information to enable them to consider the impact of the company’s decisions on its key stakeholders. This information was distributed in a range of different formats including in reports and presentations on our financial and operational performance, non-financial key performance indicators, risk, environmental, social and corporate governance matters, and the outcomes of specific pieces of engagement. As a result of this, the company has had an overview of engagement with stakeholders and other relevant factors which allows it to understand the nature of the stakeholders’ concerns and to comply with its section 172 duty to promote success of the company.
In discharging our section 172 duties we have regard to the factors set out above. We also have regard to other factors which we consider relevant to the decision being made. Those factors, for example, include the interests and relationships with employees, customers and suppliers. We acknowledge that every decision we make will not necessarily result in a positive outcome for all of our stakeholders. By considering the company’s purpose, vision and values together with its strategic priorities and having a process in place for decision-making, we do, however, aim to make sure that our decisions are consistent and predictable.
The company delegates authority for day-to-day management of the company to executives and then engage management in setting, approving and overseeing the execution of the business strategy and related policies. The company delegates to executive management to review the company’s financial and operational performance, risk and compliance, and health and safety matters.
Some of the engagement that has taken place with the company’s stakeholders during the year are:
the impact of the Covid-19 has been widespread, and we have considered all our stakeholders, and have consulted with them as the business continues to trade during the pandemic. We reviewed all relevant official guidance to ensure that our COVID-19 response was aligned with official expectations and established open dialogue with government and Public Health England, as well as other stakeholders.
as a board of directors, we provide clear information to our shareholders on a timely basis, being honest and transparent as to the performance of the business.
we engaged with planning authorities, councils, third party investors and our local communities to ensure individual companies within the group, as well as meeting legal and ethical standards, have active relationships with our local communities, and have a positive effect on those communities.
our food retail customers expect a premium product, and we meet high quality standards by engaging with the Food Standards Agency and the Health and Safety Executive, and by obtaining BRC accreditation.
Health and safety management
The company is committed to providing a safe place of work for all employees and to continuously improve our safety management and surveillance systems through diligent risk assessment, high standards and active communication.
Ethical employment
A fair system of work with terms, conditions and facilities to match, is at the heart of how the company does business and is enshrined in our company values. This includes:
a commitment to developing our people through customised, externally facilitated training providers;
an apprenticeship programme;
relationships with local colleges and universities;
entry rates of pay above the national minimum; and
no long term agency or zero hours contracts.
We strive to make Faccenda a great place to work and somewhere where everyone can make a difference.
Modern slavery
We recognise the risk and seriousness presented by human trafficking and modern slavery and have implemented safeguards to protect all our colleagues from exploitation, irrespective of how they have joined our business or how long they plan to work with us.
Employment of disabled workers
We continue to be committed to diversity in our employment proposition and, as part of this, the employment of disabled or disadvantaged colleagues is a key part of providing equal opportunity for all across our business.
Corporate and social responsibility
We are aware of the potential issues posed by our operations and actively look to lessen their impact. We are good and responsible neighbours with active relationships in our communities.
On behalf of the board
The directors present their annual report and financial statements for the year ended 31 May 2020.
The directors who held office during the year and up to the date of signature of the financial statements were as follows:
The results for the year are set out on page 13.
The directors recommend that no dividend be paid in respect of the year ended 31 May 2020.
The business is subject to certain financial risks, but has procedures and controls in place to mitigate these risks:
The group is exposed to commodity price risk as a result of its operations and routinely reviews market trends and indicators. In view of the volatility in feed markets, fixed price contracts are in place with a range of customers to manage the business risk.
The group works to continually improve the assessment of trading levels and credit risk which includes regular credit rating checks. Payment reliability remains high with continued very low exposure to bad debt.
The business is managed with bank working capital facilities to manage short term fluctuations and ensures that it has sufficient access to long term funding to meet investment requirements.
The business incurs minimal external interest charges. With limited external borrowing the impact of interest rate charges is seen as a minimal risk.
The group's policy is to consult and discuss with employees, through unions, staff councils and at meetings, matters likely to affect employees' interests.
Information about matters of concern to employees is given through information bulletins and reports which seek to achieve a common awareness on the part of all employees of the financial and economic factors affecting the group's performance.
In accordance with the company's articles, a resolution proposing that Whitley Stimpson Limited be reappointed as auditor of the group will be put at a General Meeting.
The group's emissions and energy use data from it's UK operations for the year ended 31 May 2020 is shown in the table below:
Electricity consumption used to calculate emissions: |
1,834,528 kWh |
Natural gas consumption used to calculate emissions: |
4,121,538 kWh |
Other consumption used to calculate emissions: |
127,909 litres |
Emissions from electricity |
427.70 tCO2e |
Emissions from natural gas |
757.83 tCO2e |
Emissions from LPG |
2.73 tCO2e |
Emissions from other gas and oil |
340.52 tCO2e |
Emissions from fuel for transport purposes |
7.07 tCO2e |
Total gross CO2e of above |
1,535.85 tCO2e |
Intensity ratio: tonnes of CO2e per total £million of sales revenue |
31.88 tCO2e/£million |
Methodology |
actual consumption |
The group strives to continually increase its energy efficiency. The group has installed biomass equipment onto its sites, which uses renewable energy sources derived from organic matter.
We have audited the financial statements of Faccenda Holdings Limited (the 'parent company') and its subsidiaries (the 'group') for the year ended 31 May 2020 which comprise the group profit and loss account, the group statement of comprehensive income, the group balance sheet, the company balance sheet, the group statement of changes in equity, the company statement of changes in equity, the group statement of cash flows and notes to the financial statements, including 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 FRS 102 The Financial Reporting Standard applicable in the UK and Republic of Ireland (United Kingdom Generally Accepted Accounting Practice).
Basis for opinion
We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and applicable law. Our responsibilities under those standards are further described in the Auditor's responsibilities for the audit of the financial statements section of our report. We are independent of the company in accordance with the ethical requirements that are relevant to our audit of the financial statements in the UK, including the FRC’s Ethical Standard , and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
Conclusions relating to going concern
We have nothing to report in respect of the following matters in relation to which the ISAs (UK) require us to report to you where:
the directors' use of the going concern basis of accounting in the preparation of the financial statements is not appropriate; or
the directors have not disclosed in the financial statements any identified material uncertainties that may cast significant doubt about the group's or the parent company’s ability to continue to adopt the going concern basis of accounting for a period of at least twelve months from the date when the financial statements are authorised for issue .
Other information
The directors are responsible for the other information. The other information comprises the information 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.
Opinions on other matters prescribed by the Companies Act 2006
In our opinion, based on the work undertaken in the course of our audit :
the information given in the strategic report and the directors' r eport for the financial year for which the financial statements are prepared is consistent with the financial statements ; and
the strategic report and the directors' report have been prepared in accordance with applicable legal requirements.
In the light of the knowledge and understanding of the group and the parent company and its environment obtained in the course of the audit, we have not identifie d material misstatements in the strategic report and the directors' r eport .
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 by the parent company, or returns adequate for our audit have not been received from branches not visited by us; or
the parent company financial statements are not in agreement with the accounting records and returns; or
certain disclosures of directors' remuneration specified by law are not made; or
we have not received all the information and explanations we require for our audit.
As explained more fully in the directors' r esponsibilities s tatement, 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 group's and the parent company’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the directors either intend to liquidate the group or the parent company or to cease operations, or have no realistic alternative but to do so.
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with ISAs (UK) will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements.
A further description of our responsibilities for the audit of the financial statements is located on the Financial Reporting Council’s website at: http://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.
The profit and loss account has been prepared on the basis that all operations are continuing operations.
As permitted by s408 Companies Act 2006, the c ompany has not presented its own profit and loss account and related notes. The c ompany’s profit for the period was £277,277 (2019 - £15,503 profit).
Faccenda Holdings Limited (“the company”) is a private limited company domiciled and incorporated in England and Wales. The registered office is Willow Road, Brackley, Northants, NN13 7EX.
The group consists of Faccenda Holdings Limited and all of its subsidiaries.
These financial statements have been prepared in accordance with FRS 102 “The Financial Reporting Standard applicable in the UK and Republic of Ireland” (“FRS 102”) and the requirements of the Companies Act 2006.
The financial statements are prepared in sterling , which is the functional currency of the company. Monetary a mounts in these financial statements are rounded to the nearest £.
The financial statements have been prepared under the historical cost convention, modified to include the revaluation of freehold properties and to include investment properties and certain financial instruments at fair value. The principal accounting policies adopted are set out below.
The company is a qualifying entity for the purposes of FRS 102, being the parent of a group which prepares publicly available consolidated financial statements which are intended to give a true and fair view of the assets, liabilities, financial position and profit or loss of the group. The company has therefore taken advantage of exemptions from the following disclosure requirements for parent company information presented within the consolidated financial statements:
Section 11 ‘Basic Financial Instruments’ and Section 12 ‘Other Financial Instrument Issues’ – Carrying amounts, interest income/expense and net gains/losses for each category of financial instrument; basis of determining fair values; details of collateral, loan defaults or breaches, details of hedges, hedging fair value changes recognised in profit or loss and in other comprehensive income;
Section 26 ‘Share based Payment’ – Share-based payment expense charged to profit or loss, reconciliation of opening and closing number and weighted average exercise price of share options, how the fair value of options granted was measured, measurement and carrying amount of liabilities for cash-settled share-based payments, explanation of modifications to arrangements;
Section 33 ‘Related Party Disclosures’ – Compensation for key management personnel.
The consolidated financial statements incorporate those of Faccenda Holdings Limited and all of its subsidiaries (ie entities that the g roup controls through its power to govern the financial and operating policies so as to obtain economic benefits). Subsidiaries acquired during the year are consolidated using the purchase method. Their results are incorporated from the date that control passes.
All financial statements are made up to 31 May 2020 . Where necessary, adjustments are made to the financial statements of subsidiaries to bring the accounting policies used into line with those used by other members of the g roup.
All intra-group transactions, balances and unrealised gains on transactions between group companies are eliminated on consolidation. Unrealised losses are also eliminated unless the transaction provides evidence of an impairment of the asset transferred.
Entities other than subsidiary undertakings or joint ventures, in which the group has a participating interest and over whose operating and financial policies the group exercises a significant influence, are treated as associates. In the group financial statements, associates are accounted for using the equity method.
Entities in which the group holds an interest , and which are jointly controlled by the group and one or more other venturers under a contractual arrangement , are treated as joint ventures. In the group financial statements, joint ventures are accounted for using the equity method.
At the time of approving the financial statements, the directors have a reasonable expectation that the company has adequate resources to continue in operational existence for the foreseeable future. Thus the directors continue to adopt the going concern basis of accounting in preparing the financial statements.
A key risk to the future continued going concern of the company are the risks and uncertainties as to the impact of the Covid-19 outbreak in the UK. As at the date of approving these financial statements the directors have assessed the impact of Covid-19 and are satisfied that these financial statements continue to be prepared on a going concern basis.
Turnover is recognised at the fair value of the consideration received or receivable for goods and services provided in the normal course of business, and is shown net of VAT and other sales related taxes. The fair value of consideration takes into account trade discounts, settlement discounts and volume rebates.
When cash inflows are deferred and represent a financing arrangement, the fair value of the consideration is the present value of the future receipts. The difference between the fair value of the consideration and the nominal amount received is recognised as interest income.
Revenue from the sale of goods is recognised when the significant risks and rewards of ownership of the goods have passed to the buyer (usually on dispatch of the goods), the amount of revenue can be measured reliably, it is probable that the economic benefits associated with the transaction will flow to the entity and the costs incurred or to be incurred in respect of the transaction can be measured reliably.
Revenue from contracts for the provision of professional services is recognised by reference to the stage of completion when the stage of completion, costs incurred and costs to complete can be estimated reliably. The stage of completion is calculated by comparing costs incurred, mainly in relation to contractual hourly staff rates and materials, as a proportion of total costs. Where the outcome cannot be estimated reliably, revenue is recognised only to the extent of the expenses recognised that it is probable will be recovered.
Freehold land is not depreciated.
The gain or loss arising on the disposal of an asset is determined as the difference between the sale proceeds and the carrying value of the asset, and is recognised in profit and loss .
Equity in vest ments are measured at fair value through profit or loss , except for those equity investments that are not publicly traded and whose fair value cannot otherwise be measured reliably , which are recognised at cost less impairment until a reliable measure of fair value becomes available.
I n the parent company financial statements, investments in subsidiaries, associates and jointly controlled entities are initially measured at cost and subsequently measured at cost less any accumulated impairment losses.
A subsidiary is an entity controlled by the group. Control is the power to govern the financial and operating policies of the entity so as to obtain benefits from its activities.
An associate is an entity, being neither a subsidiary nor a joint venture, in which the company holds a long-term interest and where the company has significant influence. The group considers that it has significant influence where it has the power to participate in the financial and operating decisions of the associate.
Investments in associates are initially recognised at the transaction price (including transaction costs) and are subsequently adjusted to reflect the g roup’s share of the profit or loss, other comprehensive income and equity of the associate using the equity method. Any difference between the cost of acquisition and the share of the fair value of the net identifiable assets of the associate on acquisition is recognised as goodwill. Any unamortised balance of goodwill is included in the carrying value of the investment in associates.
Losses in excess of the carrying amount of an investment in an associate are recorded as a provision only when the company has incurred legal or constructive obligations or has made payments on behalf of the associate.
In the parent c ompany financial statements, investments in associates are accounted for at cost less impairment.
Entities in which the group has a long term interest and shares control under a contractual arrangement are classified as jointly controlled entities .
At each reporting period end date, the group reviews the carrying amounts of its tangible and intangible assets to determine whether there is any indication that those assets have suffered an impairment loss. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment loss (if any). Where it is not possible to estimate the recoverable amount of an individual asset, the company estimates the recoverable amount of the cash-generating unit to which the asset belongs.
The carrying amount of the investments accounted for using the equity method is tested for impairment as a single asset. Any goodwill included in the carrying amount of the investment is not tested separately for impairment.
Recoverable amount is the higher of fair value less costs to sell and value in use. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset for which the estimates of future cash flows have not been adjusted.
If the recoverable amount of an asset (or cash-generating unit) is estimated to be less than its carrying amount, the carrying amount of the asset (or cash-generating unit) is reduced to its recoverable amount. An impairment loss is recognised immediately in profit or loss, unless the relevant asset is carried at a revalued amount, in which case the impairment loss is treated as a revaluation decrease.
Recognised impairment losses are reversed if, and only if, the reasons for the impairment loss have ceased to apply. Where an impairment loss subsequently reverses, the carrying amount of the asset (or cash-generating unit) is increased to the revised estimate of its recoverable amount, but so that the increased carrying amount does not exceed the carrying amount that would have been determined had no impairment loss been recognised for the asset (or cash-generating unit) in prior years. A reversal of an impairment loss is recognised immediately in profit or loss, unless the relevant asset is carried at a revalued amount, in which case the reversal of the impairment loss is treated as a revaluation increase.
The group has elected to apply the provisions of Section 11 ‘Basic Financial Instruments’ and Section 12 ‘Other Financial Instruments Issues’ of FRS 102 to all of its financial instruments.
Financial instruments are recognised in the group's balance sheet when the group becomes party to the contractual provisions of the instrument.
Financial assets and liabilities are offset and the net amounts presented in the financial statements when there is a legally enforceable right to set off the recognised amounts and there is an intention to settle on a net basis or to realise the asset and settle the liability simultaneously.
Equity instruments issued by the group are recorded at the proceeds received, net of transaction costs. Dividends payable on equity instruments are recognised as liabilities once they are no longer at the discretion of the group.
The tax expense represents the sum of the tax currently payable and deferred tax.
The tax currently payable is based on taxable profit for the year. Taxable profit differs from net profit as reported in the profit and loss account because it excludes items of income or expense that are taxable or deductible in other years and it further excludes items that are never taxable or deductible. The group’s liability for current tax is calculated using tax rates that have been enacted or substantively enacted by the reporting end date.
Deferred tax is provided in full in respect of taxation deferred by timing differences between the treatment of certain items for taxation and accounting purposes. The deferred tax balance has not been discounted.
Where budgetary expectations are such that anticipated profits are sufficient to recover decelerated capital allowances, a deferred tax asset is recognised.
The costs of short-term employee benefits are recognised as a liability and an expense, unless those costs are required to be recognised as part of the cost of stock or fixed assets.
The cost of any unused holiday entitlement is recognised in the period in which the employee’s services are received.
Termination benefits are recognised immediately as an expense when the company is demonstrably committed to terminate the employment of an employee or to provide termination benefits.
The group operates a defined benefit pension scheme, and defined contribution pension schemes for its employees.
Defined benefit scheme
In respect of defined benefit pension schemes, the liability recognised in the balance sheet is the fair value of the scheme assets less the present value of the defined benefit obligation at the balance sheet date, together with an adjustment for any past service costs not yet recognised. The defined benefit obligation is calculated annually by independent actuaries using the projected unit credit method. The present value of the defined benefit obligation is determined by discounting the estimated future cash outflows using interest rates of high quality corporate bonds which are denominated in the currency in which the benefits will be paid and which have terms to maturity approximating to the terms of the related pension liability.
Actuarial gains and losses arising from experience adjustments and changes in actuarial assumptions are charged or credited directly to the profit and loss reserve as they arise.
Past service costs are recognised immediately in the profit and loss account, unless the changes to the pension scheme are conditional on the employees remaining in service for a specified period of time (the vesting period). In this case, the past service costs are amortised on a straight line basis over the vesting period.
The cost of providing benefits under defined benefit plans is determined separately for each plan using the projected unit credit method, and is based on actuarial advice.
The change in the net defined benefit liability arising from employee service during the year is recognised as an employee cost. The cost of plan introductions, benefit changes, settlements and curtailments are recognised as an expense in measuring profit or loss in the period in which they arise.
The net interest element is determined by multiplying the net defined benefit liability by the discount rate, taking into account any changes in the net defined benefit liability during the period as a result of contribution and benefit payments. The net interest is recognised in profit or loss as other finance revenue or cost.
Remeasurement changes comprise actuarial gains and losses, the effect of the asset ceiling and the return on the net defined benefit liability excluding amounts included in net interest. These are recognised immediately in other comprehensive income in the period in which they occur and are not reclassified to profit and loss in subsequent periods.
The net defined benefit pension asset or liability in the balance sheet comprises the total for each plan of the present value of the defined benefit obligation (using a discount rate based on high quality corporate bonds), less the fair value of plan assets out of which the obligations are to be settled directly. Fair value is based on market price information, and in the case of quoted securities is the published bid price. The value of a net pension benefit asset is limited to the amount that may be recovered either through reduced contributions or agreed refunds from the scheme.
Defined contribution schemes
For defined contribution schemes, the group pays contributions to privately administered pension schemes on a contractual basis. The group has no further payment obligations once the contributions have been paid. The contributions are recognised as an employee benefit expense when they are due. Prepaid contributions are recognised as an asset to the extent that a cash refund or a reduction in future payments is available.
Leases are classified as finance leases whenever the terms of the lease transfer substantially all the risks and rewards of ownership to the lessees. All other leases are classified as operating leases.
Assets held under finance leases are recognised as assets at the lower of the assets fair value at the date of inception and the present value of the minimum lease payments. The related liability is included in the balance sheet as a finance lease obligation. Lease payments are treated as consisting of capital and interest elements. The interest is charged to profit or loss so as to produce a constant periodic rate of interest on the remaining balance of the liability.
Rentals payable under operating leases, including any lease incentives received, are charged to profit or loss on a straight line basis over the term of the relevant lease except where another more systematic basis is more representative of the time pattern in which economic benefits from the lease d asset are consumed.
Rentals payable under operating leases are charged against income on a straight line basis over the lease term.
Government grants are recognised at the fair value of the asset receive d or receivable when there is reasonable assurance that the grant conditions will be met and the grants will be received.
A grant that specifies performance conditions is recognised in income when the performance conditions are met . Where a grant does not specify performance conditions it is recognised in income when the proceeds are received or receivable . A grant received before the recognition criteria are satisfied is recognised as a liability.
Monetary assets and liabilities denominated in foreign currencies (including the fiinancial statements of overseas subsidiary undertakings) are translated into sterling at the rates of exchange ruling at the balance sheet date. Transactions in foreign currencies are recorded at the rate ruling at the date of the transaction. All differences are taken to the profit and loss account.
The financial statements of foreign subsidiaries are translated into sterling at the closing rates of exchange and the differences arising from the translation of the opening net investment in subsidiaries at the closing rate are taken direct to reserves.
In the application of the group’s accounting policies, the directors are required to make judgements, estimates and assumptions about the carrying amount of assets and liabilities that are not readily apparent from other sources. The estimates and associated assumptions are based on historical experience and other factors that are considered to be relevant. Actual results may differ from these estimates.
The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised where the revision affects only that period, or in the period of the revision and future periods where the revision affects both current and future periods.
The key items in the financial statements where these judgements and estimates have been made include:
a) Incorporated within the valuation of stock and work in progress, the group uses judgements and estimates of operational performance to support the calculations used within the financial statements. The value of stock and work in progress is detailed in note 20 to the financial statements.
b) The company's defined benefit pension scheme incorporates a number of key judgements and estimates and these are detailed in note 27 to the financial statements.
The exceptional item arising in the year ended 31 May 2019 is a profit of £1,035,153 on the disposal of tangible fixed assets.
The average monthly number of persons (including directors) employed by the group and company during the year was:
Their aggregate remuneration comprised:
Investment income includes the following:
The actual charge for the year can be reconciled to the expected charge for the year based on the profit or loss and the standard rate of tax as follows:
In addition to the amount charged to the profit and loss account, the following amounts relating to tax have been recognised directly in other comprehensive income:
Impairment tests have been carried out where appropriate and the following impairment losses have been recognised in profit or loss:
The impairment losses in respect of financial assets are recognised in other gains and losses in the profit and loss account.
Goodwill of £94,209 arose on acquisitions during the year by Red Deer Capital Inc. The goodwill arising on these acquisitions was written off in full in the year ended 31 May 2020.
The net carrying value of tangible fixed assets includes the following in respect of assets held under finance leases or hire purchase contracts.
Land and buildings owned by Faccenda Farms Limited with a carrying amount of £27,542,500 (2019 - £27,542,500) were revalued in February 2015 by Savills , independent valuers not connected with the company , on the basis of market value. The valuation conforms to International Valuation Standards and was based on recent market transactions on arm's length terms for similar properties.
If revalued assets were stated on an historical cost basis rather than a fair value basis, the total amounts included would have been as follows:
More information on impairment movements in the year is given in note 13.
The fair value of the investment properties has been arrived at on the basis of a valuation carried out at by the directors. The valuation by the directors has been made on an open market value basis by reference to market conditions and evidence of transaction prices for similar properties.
The investment properties held by Faccenda Farms Limited were valued in February 2015 on an open market value basis by reference to market evidence of transaction prices for similar properties by Savills, independent valuers, who are not connected with the company. This external valuation has been updated by the directors based on market conditions to arrive at the fair value as at 31 May 2020.
Listed investments included above:
Details of the company's subsidiaries at 31 May 2020, all of which have been included in the consolidation, are as follows:
Registered office addresses (all UK unless otherwise indicated):
Faccenda Holdings Limited holds a 100% interest in and is the immediate parent undertaking in each of Faccenda Group (South) Limited, and Faccenda Investments LImited.
Faccenda Investments Limited holds a 100% interest in and is the immediate parent undertaking in each of Ambrosden Developments Limited, Faccenda Agriculture Limited, Faccenda Farms Limited, Faccenda Property Limited, Faccenda Property Management Limited, Goodhart Holdings Limited, Wellington Airfield Limited, and Wendlebury Developments Limited.
Faccenda Farms Limited holds a 100% interest in and is the immediate parent undertaking in each of Bury Farm Sharpenhoe Limited, Faccenda Farms (Enstone) Limited, and Faccenda Farms (Partnership) Limited.
Faccenda Property Limited holds a 51% interest in and is the immediate parent undertaking in each of Banbury Road Projects LLP , Howes Lane Projects LLP, Northampton Road Projects LLP, and Skimmingdish Lane Projects LLP, and holds a 100% interest in and is the immediate parent undertaking of Audiology House Limited.
Faccenda Investments Limited holds a 49% interest in Northampton Road Projects LLP.
Faccenda Investments Limited holds a 51% interest in and is the immediate parent undertaking of Red Deer Capital Inc.
Red Deer Capital Inc. holds a 100% interest in and is the immediate parent undertaking in each of Hitchcock Properties LLC, Kalow Technologies LLC, USMT LLC, Parts Tool and Die LLC, and Thomas Precision Technologies LLC.
Faccenda Farms Limited, Bury Farm Sharpenhoe Limited, Faccenda Farms (Enstone) Limited, and Faccenda Farms (Partnership) Limited each prepared accounts to 30 September 2019. For each of these companies, interim accounts were prepared to 31 May 2020, for inclusion in the consolidated accounts of the group.
Details of joint ventures at 31 May 2020 are as follows:
The carrying amount of the investments in jointly controlled entities is £4,638,985. The investments are accounted for using the cost model.
Faccenda Investments Limited holds a 50% interest in Dartmouth Holdings Limited and its subsidiary, Dartmouth Foods Limited. Faccenda Investments Limited exercises dominant influence over Dartmouth Holdings Limited and Dartmouth Foods Limited, and they are included within the consolidated financial statements of Faccenda Holdings Limited.
The registered office of both Dartmouth Foods Limited and Dartmouth Holdings Limited is Unit 1 – 9 Hearder Court, Beechwood Way, Langage Business Park, Plymouth, Devon, PL7 5HH.
The bank loan and overdraft facilities with Barclays Bank plc are secured by a debenture, dated 30 April 2012, which secures monies due or becoming due, and a debenture, dated 22 May 2006, by way of a fixed charge over trade and other debts, and by way of a floating charge over other assets not subject to the fixed charge. Barclays Bank plc is allowed to offset credit balances against liabilities for interest in certain circumstances.
Hitchcock Properties LLC entered into a long-term debt arrangement during 2013 which consisted of a US$3,500,000 mortgage loan. The credit facility was secured by real property located in New Hartford, Connecticut. Interest was calculated at LIBOR plus 2.35% per annum plus or minus an interest swap that results in an "all in" fixed interest rate of 3.33%. The mortgage was repaid in monthly principal payments of $24,306 plus interest, and was to mature on 1 August 2024, but was repaid in full during the year ended 31 May 2019.
In May 2020 Red Deer Capital Inc entered into a short-term loan agreement with Liberty Bank. US$1,951,345 was advanced under the paycheck protection program, so as to assist Red Deer Capital Inc and its subsidiaries, during the Covid-19 pandemic, to retain its employees and pay the payroll costs of its employees.
Net obligations under finance lease and hire purchase agreements are secured on the assets held under such agreements.
Deferred tax assets and liabilities are offset where the group or company has a legally enforceable right to do so. The following is the analysis of the deferred tax balances, after offset, for financial reporting purposes:
The deferred tax balances set out above are expected to reverse within 12 months and relate to timing differences that are expected to mature within the same period.
The group makes contributions to defined contribution pension schemes in respect of selected weekly and monthly paid employees. The assets of the schemes are held separately from those of the group in independently administered schemes. The pension cost charge represents contributions payable by the group to the schemes and amounted to £255,117 (2019 - £235,692). No contributions (2019 - £nil) were payable to the schemes at the year end.
The group operates a defined benefit pension scheme for selected employees. The assets of the scheme are held separately from those of the group in an independently administered scheme. Contributions to the scheme are charged to the profit and loss account so as to spread the cost of pensions over employees' working lives with the group. The contributions are determined by qualified actuaries on the basis of triennial valuations using the projected unit method.
Following consultation with the active members, the scheme closed to benefit accrual with effect from 31 May 2017. All active members at this date became deferred members. No employee or employer contributions in respect of benefit accrual are therefore required after 31 May 2017.
The most recent full actuarial valuation of the defined benefit scheme was as at 6 April 2019. This was completed by Barnett Waddingham LLP. The assumptions which have the most significant effect on the technical provisions of the valuation are:
The full actuarial valuation as at 6 April 2019 showed that the market value of the scheme's assets was £30,149,000 and that the scheme had assets sufficient to cover 90% of its Technical Provisions as at 6 April 2019, corresponding to a deficit of £3,496,000.
In light of the results of the valuation the trustees agreed with Faccenda Investments Limited that the following contributions will be paid.
£1,160,000 during the year ending 5 April 2020.
£840,000 during the year ending 5 April 2021.
£840,000 during the year ending 5 April 2022.
£840,000 during the year ending 5 April 2023.
£70,000 by 5 May 2023.
These contributions are expected to eliminate the shortfall by 5 May 2023.
For the year ended 5 April 2018 and onwards the contributions set above are expected to be partially met through a proposed charge in favour of the trustees over the rental income due to Faccenda Investments Limited from the Wing Airfield site.
The disclosures required under FRS 102, set out below, have been calculated by qualified actuaries based on the assumptions in the valuation of the scheme as at 6 April 2019, reviewed and updated to 31 May 2020, the group reporting date.
Assumed life expectations on retirement at age 65:
Amounts recognised in the profit and loss account
Amounts taken to other comprehensive income
The amounts included in the balance sheet arising from obligations in respect of defined benefit plans are as follows:
Movements in the present value of defined benefit obligations
The defined benefit obligations arise from plans which are wholly or partly funded.
Movements in the fair value of plan assets
The actual return on plan assets was £237,000 (2019 - £740,000).
Fair value of plan assets at the reporting period end
The company, together with other members of the Faccenda Holdings Limited group, has entered into a composite accounting agreement with Barclays Bank plc, together with unlimited cross guarantees with the same bank. The Faccenda Holdings Limited group bank facilities are secured by a debenture which secures monies due or becoming due by way of a fixed charge over trade and other debtors, and by way of a floating charge over other assets not subject to the fixed charge.
Faccenda Investments Limited is obliged, as the principal employer of the Faccenda Retirement Benefit and Life Assurance Scheme, to guarantee the benefits provided by the scheme if it were wound up.
At the reporting end date the group had outstanding commitments for future minimum lease payments under non-cancellable operating leases, which fall due as follows:
At the reporting end date the group had contracted with tenants for the following minimum lease payments:
Amounts contracted for but not provided in the financial statements:
The remuneration of key management personnel is as follows.
In accordance with section 33.1A of FRS 102 disclosure is not given in these financial statements of transactions entered into between two or more members of the group, provided that any subsidiary which is party to the transaction is wholly owned by such a member.
The directors are the sole shareholders of a management company, Ingleby (159), a company which provides payroll services to directors and senior employees of the Faccenda Investments Limited group. During the year £1,757,513 (2019 - £1,714,256) was charged by Ingleby (159) to the Faccenda Investments Limited group. At 31 May 2020 Faccenda Investments Limited owed £468,102 (2019 - £361,931) to Ingleby (159).
As at 31 May 2020 Faccenda Investments Limited was owed £14,459,482 (2019 - £14,744,607) by Red Deer Capital Inc, a company registered in the United States of America, in which Faccenda Investments Limited owns 51% of the ordinary share capital. Interest charged during the year amounted to £534,252 (2019 - £502,347).
As at 31 May 2020 Faccenda Investments Limited was owed £1,013,701 (2019 - £1,251,602) by Dartmouth Foods Limited. Interest is being charged on this loan at 5% above the base rate and a repayment plan is in place. Interest charged by Faccenda Investments Limited to Dartmouth Foods Limited during the year amounted to £62,187 (2019 - £84,835). In addition, as at 31 May 2020 Faccenda Investments Limited owed £34,870 (2019 - £97,058) to Dartmouth Foods Limited.
At 31 May 2020 Faccenda Investments Limited was owed £448,400 (2019 - £28,614) by The Hillesden Trust, a trust in which the company directors have an interest.
Faccenda Foods Limited is a company with common directors. Rent received during the year by Faccenda Investments Limited from Faccenda Foods Limited amounted to £441,635 (2019 - £838,205). During the year £84,354 (2019 - £110,415) was recharged from Faccenda Investments Limited to Faccenda Foods Limited, and £8,830 (2019 - £118,015) was recharged from Faccenda Foods Limited to Faccenda Investments Limited, in respect of expenses. As at 31 May 2020 Faccenda Investments Limited was owed £84,354 (2019 - £41,774) by Faccenda Foods Limited in relation to recharge of expenses shown in other debtors.
During the year Dartmouth Foods Limited purchased raw materials from Faccenda Foods (Lincs) Limited to the sum of £5,328,272 (2019 - £6,771,114). At 31 May 2020 Faccenda Foods (Lincs) Limited were owed £968,046 (2019 - £1.953,428) by Dartmouth Foods Limited.
During the year Dartmouth Foods Limited purchased raw materials from Faccenda Foods Limited to the sum of £nil (2019 - £429,047). At 31 May 2020 Faccenda Foods Limited was owed £nil (2019 - £33,600) by Dartmouth Foods Limited.
During the year £400,000 was received by Dartmouth Foods Limited from The Faccenda Foundation, a related UK registered charity. This money has been received to provide food to an unrelated UK registered charity, Fareshare, at cost. None of the products have yet been provided and therefore the full consideration has been included within deferred income.
Faccenda Property Limited owns a 51% stake in Northampton Road Projects LLP, a limited liability partnership registered in England and Wales. As at 31 May 2020 Faccenda Property Limited was owed £nil (2019 - £33,410) by Northampton Road Projects LLP in respect of profits due to members.
Faccenda Property Limited owns a 51% stake in Howes Lane Projects LLP, a limited liability partnership registered in England and Wales. As at 31 May 2019 a loan balance of £7,776,594 (2019 - £6,123,226) was owed to Faccenda Property Limited by Howes Lane Projects LLP. No interest is charged on amounts outstanding at the year end.
Faccenda Property Limited owns a 51% stake in Skimmingdish Lane Projects LLP, a limited liability partnership registered in England and Wales. Faccenda Property Limited has made loans to Skimmingdish Lane Projects LLP. As at 31 May 2020 and 31 May 2019 the loans had been fully repaid. Interest charged on the loans amounted to £nil (2019 - £86,456). In addition, as at 31 May 2020 Faccenda Property Limited was owed £250,815 (2019 - £3,988,837) in respect of profits due to members.
Faccenda Property Limited owns a 51% stake in Banbury Road Projects LLP, a limited liability partnership registered in England and Wales. As at 31 May 2020 members capital of £51 (2019 - £51) was owed to the LLP, and a loan balance of £17,417 (2019 - £16,468) was owed to Faccenda Property Limited by Banbury Road Projects LLP. No interest is charged on amounts outstanding at the year end.
Included within trade debtors at the year end are amounts owed to Faccenda Property Limited by the directors, and various trusts in which the directors have an interest or have influence. During the year recharges were made to I. J. Faccenda totalling 143,857 (2019 - £5,575) of which £133,557 (2019 - £299) was outstanding at the year end. Recharges were made to A. J. Gulliver of £1,245 (2019 - £2,509) of which £nil (2019 - £61) was outstanding at the year end. Recharges were made to R. M. Faccenda of £nil (2019 - £2,132) of which £355 (2019 - £2,132) was outstanding at the year end. Recharges were made to H. A. Faccenda of £1,943 (2019 - £12,031) of which £11,082 (2019 - £12,031) was outstanding at the year end. Interest is not charged on any of the above amounts outstanding.
During the year recharges were made by Faccenda Property Limited to The Hillesden Trust, in which the directors have an interest, of £867,534 (2019 - £462,954). At the year end there is a balance of £884,609 (2019 - £17,075) included in trade debtors owed by The Hillesden Trust, for the recharge of expenditure incurred in the year. Interest is not charged on amounts outstanding.
During the year recharges were made to Faccenda Property Limited from Faccenda Foods Limited, in which the directors have an interest, of £765,917 (2019 - £nil). Recharges were made to Faccenda Foods Limited of £5,570 (2019 - £nil). At the year end Faccenda Property Limited was owed £nil (2019 - £223,037) by Faccenda Foods Limited.
Faccenda Foods Limited trades on normal commercial terms with Faccenda Farms Limited. During the year Faccenda Farms Limited made sales of £1,291,503 (2019 - £965,258) to Faccenda Foods Limited.
Interest free loans have been granted by the group to its directors as follows:
No date for repayment has been set.