A Hughes And Son(Skellingthorpe)Limited

We aim to present a balanced and comprehensive review of the development and performance of our business during the year and its position at the year end. Our review is consistent with the size and nature of our business and is written in the context of the risks and uncertainties we face. PRINCIPAL ACTIVITY A Hughes and Son (Skellingthorpe) Limited is a wholly owned subsidiary of Lincoln Protein Holdings Ltd. The group is engaged in the rendering of material from the food processing and agricultural sectors into meat and bonemeal and tallow. Its revenue is derived from the collection of material and the sale of tallow and meat and bonemeal. BUSINESS REVIEW The company has reported a significant reduction in revenue to £28,406,603 (2023 - £50,247,622). Operating profit amounted to £254,864 (2023 - £268,923). The results reflect reduced volumes processed through the group's rendering facilities, with tightening margins. During the period shareholder's funds increased to £2,665,910 (2023 - £2,490,287). The company's key performance indicators are production costs per tonne and these are principally driven by labour, energy and transport costs, relative to throughput. The company's aim is to further build its supply base and improve performance through increased throughput and operational performance. RISK MANAGEMENT POLICIES Energy risk The conflict in Ukraine continues to evolve as military activity proceeds and sanctions imposed on Russia. The economic ramifications have lead to increases in energy prices, rising inflation and interest rates and fluctuations in foreign exchange rates. The company manages energy costs through forward contracts to mitigate against sudden increases in price for electricity and gas and explores options around alternative energy sources. Interest rate risk The company's exposure to market risk for the changes in interest rates relates primarily to its bank and finance lease borrowings. The company seeks to manage this risk by the use of a combination of variable and fixed rates. Liquidity risk The company seeks to manage financial risk by ensuring sufficient liquidity is available to meet foreseeable needs and to invest cash assets safely and profitably. Short-term flexibility is achieved by overdraft facilities. Inflation risk The company is exposed to the impact of inflation on its costs and every effort is made to mitigate this. As for many businesses of our size, the business environment in which we operate continues to be challenging. Nevertheless with these risks and uncertainties in mind, we are aware that any plans for the future development of the business may be subject to unforeseen future events outside of our control.