Lincoln Protein Holdings Ltd

We aim to present a balanced and comprehensive review of the development and performance of the group during the year and its position at the year end. Our review is consistent with the size and nature of the group and is written in the context of the risks and uncertainties we face. Principal activity Lincoln Protein Holdings Ltd is the holding company for the group. The group consolidated accounts includes the results of Lincoln Proteins Limited, A Hughes & Son (Skellingthorpe) Limited, the Inztec companies and the Dundas companies. On 26 July 2024 the group acquired the remaining 50% of the ordinary share capital of Dundas Rendering Limited. The group is engaged in the rendering of material from the food processing and agricultural sectors into tallow and MBM (meat and bonemeal). Revenue is derived from the collection of material and the sale of tallow and MBM. Business review The group has reported an increase in revenue to £49,352,165 (2023 - £41,135,113). The increase in operating profit to £2,040,131 (2023 - £1,559,453) follows the consolidation of the Dundas companies for 5 months. During the period shareholder's funds increased to £25,605,044 (2023 - £24,976,709). Capital expenditure during the period was £2,132,984 representing continued expansion and improvement of the group's production facilities. The group's key performance indicators are production costs per tonne and these are principally driven by labour, energy and transport costs relative to throughput. The group's aim is to further build its supply base and improve performance through increased throughput and operational performance. Section 172 statement The directors are aware of their duty under Section 172 of the Companies Act 2006. Section 172 of that act requires directors of the company to act in the way which they consider, in good faith, would be most likely to promote the success of the company for the benefit of its members and key stakeholders. When making key decisions for the company the directors have considered the impact of those decisions on the company's key stakeholders and also on wider society. The directors engage with key stakeholders when making decisions and formulating strategy. The directors also consider the environment and society in general in their decision making process. A core value is long-term thinking and building lasting relationships with suppliers, customers, government agencies and employees. In addition the directors recognise its employees are a critical success factor for the company and seek to assist employees to succeed through a positive culture of development and engagement. Risk management policies The group faces a number of risks and the directors continue to mitigate these as far as possible. A summary of the key risks are as follows:- 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 group manages energy costs through forward contracts to mitigate against sudden increases in price for electricity and gas and explores options around alternative energy sources. Market risk- the price of both meat and bonemeal and tallow can be subject to volatility. To mitigate this the group monitors market conditions so that its input costs respond as far as possible to changes in market prices. Competitor risk- the group operates in a highly competitive sector where maintaining and expanding volumes rendered is crucial to the development of the group. In order to mitigate this risk the group focuses on building lasting relationships with material suppliers and in seeking additional opportunities to further expand the supplier base. Credit risk- the group seeks to manage its credit risk by dealing with established customers or otherwise checking the credit-worthiness of new customers, establishing clear contractual relationships with those customers and by identifying and addressing any credit issues arising in a timely manner. Environmental risk- the group's activities are in an environmentally sensitive sector. To mitigate this risk the group ensures that strict operational procedures are followed and that equipment is maintained to a high standard. Inflation risk - the group is exposed to the impact of inflation on its costs and every effort is made to mitigate the negative effect of this on performance.