The directors present the strategic report for the year ended 30 January 2023.
In the year to January 2023 the Group faced exceptionally challenging trading conditions whilst seeking to recover from the disruption in prior years of the impact of Covid on the demand for the Group’s products and from Brexit on the availability of labour.
In the year to January 2023 the business experienced exceptionally high increases to key bakery input costs (ingredients and packaging), as well as to power and labour costs. Input price inflation on bakery commodities was exacerbated by the disruption to supply chains resulting from the war in Ukraine. As a result, the Group’s margin was heavily eroded and the Group incurred a material loss for the year to January 2023.
The Group changed ownership in September 2022 and the new owners have invested significantly to enhance productivity and quality through investment in the management team, equipment and operational processes and procedures. As a result, the Group has seen a recovery in its turnover to almost £28million in the year to January 2024, with margin returning to pre-Covid levels. Further growth and increased profitability is forecast for the year to January 2025.
Funding
The new shareholders have supported the Group during its recovery and development phase through the provision of business loans, either directly or via an associated company. This funding totalled £1.6m at January 2023 and had been increased to £3.3m at January 2024, providing the resources needed to drive improved performance and development of the business and more than offsetting the balance sheet deficit, if shareholder loans are viewed as quasi-equity.
The Directors and senior management carefully and regularly consider the group’s challenges and opportunities as well as its ongoing operational and financial performance.
The Directors have considered and mitigated the risk profile of the group during the financial period:
Input price volatility – Risks impacting margin through movements in commodity and input prices. This risk has been mitigated by expanding the management team to include a buying specialist and locking in to contracted prices, where advantageous, to reduce the risk of volatility.
Production quality – Ensuring that appropriate standards, processes and procedures are in place to drive consistent high quality products and continued high rating in BRC and customer audits is a priority for management. External consultants have been engaged to improve and consolidate best practice and the operational management, technical and QA resources have been expanded.
Financial – the business is experiencing growth after a challenging period through Covid. Ensuring sufficient working capital to drive the growth is in place is a key factor for management. The shareholders have mitigated this risk by providing material levels of loan funding to the business to allow recovery and growth to be delivered, as well as funding improved infrastructure within which growth can be delivered.
Labour costs – cost increases through material levels of wage inflation. These have been mitigated through improved factory efficiency and processes together with improved and new equipment which has resulted in enhanced productivity from our team.
The business increased its turnover by 17.5% (£3.8m) to £25.5m in the year to January 2023, reflecting a recovery in demand for our products.
Further growth has taken place in the year to January 2024 with turnover increasing by a further 9% to £27.8m, with new products developed and launched with retail customers.
Gross profit margin has recovered in the year to January 2024 as operational efficiency and productivity has been targeted by the management team.
The business achieved an A* BRC audit rating and “Green” (or equivalent) ratings with major supermarket retail customers.
On behalf of the board
The directors present their annual report and financial statements for the year ended 30 January 2023.
The results for the year are set out on page 8.
No ordinary dividends were paid. The directors do not recommend payment of a further dividend.
The directors who held office during the year and up to the date of signature of the financial statements were as follows:
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.
There is no employee share scheme at present, but the directors are considering the introduction of such a scheme as a means of further encouraging the involvement of employees in the company's performance.
In accordance with the company's articles, a resolution proposing that Royce Peeling Green Limited be reappointed as auditors of the company will be put at a General Meeting.
We have audited the financial statements of Schocroft Cove Limited (the 'parent company') and its subsidiaries (the 'group') for the year ended 30 January 2023 which comprise 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 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).
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 group and parent 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 group's and parent company’s ability to continue as a going concern for a period of at least twelve months from when the financial statements are authorised for issue.
Our responsibilities and the responsibilities of the directors with respect to going concern are described in the relevant sections of this report.
Other information
The other information comprises the information included in the annual report other than the financial statements and our auditor's report thereon. The directors are responsible for the other information contained within the annual report. Our opinion on the financial statements does not cover the other information and, except to the extent otherwise explicitly stated in our report, we do not express any form of assurance conclusion thereon. Our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the course of the audit, or otherwise appears to be materially misstated. If we identify such material inconsistencies or apparent material misstatements, we are required to determine whether this gives rise to a material misstatement in the financial statements themselves. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact.
We have nothing to report in this regard.
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' report for the financial year for which the financial statements are prepared is consistent with the financial statements; and
the strategic report and the directors' report have been prepared in accordance with applicable legal requirements.
In the light of the knowledge and understanding of the group and the parent company and their environment obtained in the course of the audit, we have not identified material misstatements in the strategic report or the directors' report.
We have nothing to report in respect of the following matters in relation to which the Companies Act 2006 requires us to report to you if, in our opinion:
adequate accounting records have not been kept 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' responsibilities statement, 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 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 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.
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 specific procedures for this engagement and the extent to which these are capable of detecting irregularities, including fraud, are detailed below:
At the planning stage of the audit we gain an understanding of the laws and regulations which apply to the company and how management seek to comply with them. This helps us to make appropriate risk assessments.
During the audit we focus on relevant risk areas and review compliance with laws and regulations through making relevant enquiries and corroboration by, for example, reviewing Board Minutes and other documentation.
We assess the risk of material misstatement in the financial statements including as a result of fraud and undertake procedures including:
Review of controls set in place by management
Enquiry of management as to whether they consider fraud or other irregularities may have occurred or where such opportunity might exist
Challenge of management assumptions with regard to accounting estimates
Identification and testing of journal entries, particularly those which may appear to be unusual by size or nature.
Because of the inherent limitations of an audit, there is a risk that we will not detect all irregularities, including those leading to a material misstatement in the financial statements, or non-compliance with regulation. This risk increases the more that compliance with a law or regulation is removed from the events and transactions reflected in the financial statements, as we are less likely to become aware of instances of non-compliance. The risk is also greater regarding irregularities occurring due to fraud rather than error, as fraud involves intentional concealment, forgery, collusion, omission or misrepresentation.
A further description of our responsibilities is located on the Financial Reporting Council’s website at: https://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.
These financial statements have been prepared in accordance with the provisions relating to medium-sized groups.
As permitted by s408 Companies Act 2006, the company has not presented its own profit and loss account and related notes. The company’s profit for the year was £4,544 (2022 - £314,631 profit).
Schocroft Cove Limited (“the company”) is a private limited company domiciled and incorporated in England and Wales. The registered office is .
The group consists of Schocroft Cove 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 amounts 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 consolidated group financial statements consist of the financial statements of the parent company Schocroft Cove Limited together with all entities controlled by the parent company (its subsidiaries) and the group’s share of its interests in joint ventures and associates.
All financial statements are made up to 30 January 2023. 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 group.
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.
Subsidiaries are consolidated in the group’s financial statements from the date that control commences until the date that control ceases.
The directors have prepared trading and cashflow forecasts for the Group extending to 30 January 2025, with further illustrative forecasts to 30 January 2026. The forecasts reflect the substantial resources provided by the shareholders totalling £3.3m of loan funding as at 30 January 2024, which has more than covered the loss incurred in FY2023 and provided funding to invest in the recovery of the business in FY2024 and beyond including further short term committed facilities to help with seasonal trading peaks.
One of the shareholders also acquired The Cake Crew Limited’s factory site in January 2024, via a family property company, to provide long term security of tenure for the business and greater flexibility for potential future developments.
The forecasts reflect further growth for the business and an expectation that the company has now restored its margin and its ability to operate profitability, whilst paying down the residual amounts of term debt largely taken out during the Covid period.
At the time of approving the financial statements, the directors have a reasonable expectation that the Group and company have 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.
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.
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.
Research expenditure is written off against profits in the year in which it is incurred. Identifiable development expenditure is capitalised once the technical, commercial and financial feasibility can be demonstrated.
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 the profit and loss account.
Equity investments 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.
In 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.
The investments are assessed for impairment at each reporting date and any impairment losses or reversals of impairment losses are recognised immediately in profit or loss.
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.
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.
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.
Basic financial assets, which include debtors and cash and bank balances, are initially measured at transaction price including transaction costs and are subsequently carried at amortised cost using the effective interest method unless the arrangement constitutes a financing transaction, where the transaction is measured at the present value of the future receipts discounted at a market rate of interest. Financial assets classified as receivable within one year are not amortised.
Other financial assets, including investments in equity instruments which are not subsidiaries, associates or joint ventures, are initially measured at fair value, which is normally the transaction price. Such assets are subsequently carried at fair value and the changes in fair value are recognised in profit or loss, except that investments in equity instruments that are not publicly traded and whose fair values cannot be measured reliably are measured at cost less impairment.
Financial assets, other than those held at fair value through profit and loss, are assessed for indicators of impairment at each reporting end date.
Financial assets are impaired where there is objective evidence that, as a result of one or more events that occurred after the initial recognition of the financial asset, the estimated future cash flows have been affected. If an asset is impaired, the impairment loss is the difference between the carrying amount and the present value of the estimated cash flows discounted at the asset’s original effective interest rate. The impairment loss is recognised in profit or loss.
If there is a decrease in the impairment loss arising from an event occurring after the impairment was recognised, the impairment is reversed. The reversal is such that the current carrying amount does not exceed what the carrying amount would have been, had the impairment not previously been recognised. The impairment reversal is recognised in profit or loss.
Financial assets are derecognised only when the contractual rights to the cash flows from the asset expire or are settled, or when the group transfers the financial asset and substantially all the risks and rewards of ownership to another entity, or if some significant risks and rewards of ownership are retained but control of the asset has transferred to another party that is able to sell the asset in its entirety to an unrelated third party.
Financial liabilities and equity instruments are classified according to the substance of the contractual arrangements entered into. An equity instrument is any contract that evidences a residual interest in the assets of the group after deducting all of its liabilities.
Basic financial liabilities, including creditors, bank loans and loans from fellow group companies are initially recognised at transaction price unless the arrangement constitutes a financing transaction, where the debt instrument is measured at the present value of the future payments discounted at a market rate of interest. Financial liabilities classified as payable within one year are not amortised.
Debt instruments are subsequently carried at amortised cost, using the effective interest rate method.
Trade creditors are obligations to pay for goods or services that have been acquired in the ordinary course of business from suppliers. Amounts payable are classified as current liabilities if payment is due within one year or less. If not, they are presented as non-current liabilities. Trade creditors are recognised initially at transaction price and subsequently measured at amortised cost using the effective interest method.
Financial liabilities are derecognised when the group's contractual obligations expire or are discharged or cancelled.
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 substantively enacted by the reporting end date.
Deferred tax liabilities are generally recognised for all timing differences and deferred tax assets are recognised to the extent that it is probable that they will be recovered against the reversal of deferred tax liabilities or other future taxable profits. Such assets and liabilities are not recognised if the timing difference arises from goodwill or from the initial recognition of other assets and liabilities in a transaction that affects neither the tax profit nor the accounting profit.
The carrying amount of deferred tax assets is reviewed at each reporting end date and reduced to the extent that it is no longer probable that sufficient taxable profits will be available to allow all or part of the asset to be recovered. Deferred tax is calculated at the tax rates that are expected to apply in the period when the liability is settled or the asset is realised. Deferred tax is charged or credited in the profit and loss account, except when it relates to items charged or credited directly to equity, in which case the deferred tax is also dealt with in equity. Deferred tax assets and liabilities are offset if, and only if, there is a legally enforceable right to offset current tax assets and liabilities and the deferred tax assets and liabilities relate to taxes levied by the same tax authority.
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.
Payments to defined contribution retirement benefit schemes are charged as an expense as they fall due.
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 leased asset are consumed.
Government grants are recognised at the fair value of the asset received 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.
Transactions in currencies other than pounds sterling are recorded at the rates of exchange prevailing at the dates of the transactions. At each reporting end date, monetary assets and liabilities that are denominated in foreign currencies are retranslated at the rates prevailing on the reporting end date. Gains and losses arising on translation in the period are included in profit or loss.
Auditors Limitation of Liability
The company has entered into a liability limitation agreement with Royce Peeling Green Limited, the statutory auditor, in respect of the statutory audit for the year ended 30 January 2023. The proportionate liability agreement follows the standard terms in Appendix B to the FRC's June 2008 Guidance on Auditor Liability Agreements, and has been approved by the shareholders.
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 following judgements (apart from those involving estimates) have had the most significant effect on amounts recognised in the financial statements.
The provision is based on a review of old/ slow moving stock lines, especially packaging materials, and the estimated realisation of that stock. The estimated realisation is based on past experience and subsequent recovery after the year end.
All intangible assets are considered by FRS 102 to have a finite useful life. The expected useful life of the asset is estimated by the directors. The depreciable amount of an intangible asset is charged on a systematic basis over its useful life. Where there is a change in circumstance regarding the recognition criteria for capitalisation of development costs such as forecast sales of products developed this could lead to reassessment of the useful life of that asset.
The average monthly number of persons (including directors) employed by the group and company during the year was:
Their aggregate remuneration comprised:
Directors' remuneration includes an amount of £96,000 paid to a company of which a director of the group was also a director and 100% shareholder for consultancy services.
A defined contribution pension scheme is operated for all qualifying employees. The assets of the scheme are held separately from those of the group in an independently administered fund.
The actual (credit)/charge for the year can be reconciled to the expected credit for the year based on the profit or loss and the standard rate of tax as follows:
The group has tax losses to carry forward for offset against future profits of some £1.8m (2022: £Nil). No deferred tax asset has been recognised in respect of carry forward losses due to uncertainty around the timing of their utilisation.
The net carrying value of tangible fixed assets includes the following in respect of assets held under finance leases or hire purchase contracts.
Details of the company's subsidiaries at 30 January 2023 are as follows:
Registered office addresses (all UK unless otherwise indicated):
In the prior year financial statements amounts owed by group undertakings of £69,674 were shown as a debit balance within creditors amounts falling due within one year. The comparative information in the these financial statements has been amended to present this amount within debtors. This has no impact on profit and loss account.
The invoice discounting facility and a loan of £483,428 (2022: £650,130) are secured by fixed and floating charges over the undertaking and assets of the subsidiary company dated 20 November 2015.
The invoice discounting facility and a loan of £483,428 (2022: £650,130) are secured by fixed and floating charges over the undertaking and assets of the company dated 20 November 2015.
Loans also include loans from Finance Wales of £215,554 (2022: £273,476) which are secured by fixed and floating charges over the undertaking and assets of the subsidiary company dated 12 April 2017 and 25 June 2020, a Barclays Bank loan amounting to £117,096 (2022: £211,115) which is secured by guarantees from the Department of Business and Industry dated 4 July 2018 and partial guarantee by the PA Scholes and GJ Bancroft (see note 22), other term loans which are secured by guarantee from Schocroft Cove Limited amounting to £425,108 (2022: £250,000) and a further loan of £88,552 (2022: £155,250) guaranteed by Schocroft Cove Limited, GJ Bancroft and PA Scholes. Other loans comprise shareholder loans.
Amounts owed under finance leases are secured against the underlying assets to which the finance relates
The following are the major deferred tax liabilities and assets recognised by the group and company, and movements thereon:
On 21 September 2021 the company issued 8 B ordinary shares of £0.01 each and 32 C ordinary shares of £0.01 each for cash at par. These movements were not disclosed in the prior year financial statements.
On 20 September 2022 the company issued 600,000 Preferred ordinary shares of £1 each at par for which consideration was the conversion of £600,000 of the unsecured loan notes.
The Preferred ordinary shareholders take precedence on any winding up or realisation event to receive the sum of £600,000 before any further amounts can be paid to other shareholders. These shares carry no voting rights.
The B ordinary shares and C ordinary shares entitle the shareholders to share in the assets of the company on a realisation event where the total value of consideration exceeds certain thresholds. The B shares have no voting rights and are not eligible for dividends.
Share options
Share options were granted in 2017 over 24 ordinary (now A ordinary) shares of £0.01 each. The options can only be exercised on the occurrence of a realisation event. The exercise price is £0.01. The option expires in July 2027.
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:
Mr RTE Capper is also a director of WRC Recycling Limited, a company incorporated and registered in Scotland. Under the term of a facility agreement dated 22 December 2022, WRC Recycling Limited has made loans of £1,004,000 to the company at 30 January 2023 (2022: £Nil). The loans are unsecured and bear interest at 10%. Creditors due within one year includes accrued interest of £8,224.
The loans and interest were initially scheduled for repayment in monthly instalments from February 2024 with a final repayment date of 31 January 2029. The terms of the loan agreements have subsequently been varied to commence monthly instalments in February 2025 and a final repayment date of January 2030.
Rental charges include £57,500 (2022: £50,417) paid to The Cake Crew Group SIPP. G.J Bancroft and P.A Scholes are members of this scheme. Included in trade creditors is an amount of £7,444 (2022: £Nil) due to the scheme.
The GJ Bancroft and PA Scholes have provided personal guarantees of £165,000 (2022: £165,000) in respect of the invoice discounting creditor, £175,000 (2022: £175,000) in respect of Finance Wales loans, £117,096 (2022: £211,115) in respect of the Barclays Bank loan and £88,552 (2022: £155,250) in respect of other loans.
At the year end the directors had loans totalling £1,598,000 (2022: £556,899). Interest of £5,890 (2022: £16,220) has been charged at 3% on the outstanding amounts.
Under the term of a facility agreement dated 22 December 2022, RC McCarthy has made loans of £594,000 to the company at 30 January 2023 (2022: £Nil). The loans are unsecured and bear interest at 10%. Creditors due within one year includes accrued interest of £7,235.
The loans and interest were initially scheduled for repayment in monthly instalments from February 2024 with a final repayment date of 31 January 2029. The terms of the loan agreements have subsequently been varied to commence monthly instalments in February 2025 and a final repayment date of January 2030.
In the year to 30 January 2024, the shareholders continued to support the business via £1.7m of additional loan funding, increasing their total loans to £3.3m.
In addition, the shareholders supported the Business via:-
the acquisition, via an associated company, of new packaging equipment, a van and a larger, new oven. This equipment is provided to the Business under leasing agreements.
The acquisition of the company’s manufacturing facility in Bala, Gwynedd via an associated company. A new 10 year lease has been entered into to provide the company with security of tenure and more flexibility around potential future developments.
In the year to January 2024, external term debt of c.£550,000 has been repaid by the company and no new external term debt taken on. Funding for the growth and development of the business has been provided by the shareholders via term loans and other short term facilities.