Company registration number 08787258 (England and Wales)
SCHOCROFT COVE LIMITED
ANNUAL REPORT AND FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JANUARY 2023
SCHOCROFT COVE LIMITED
COMPANY INFORMATION
Directors
P A Scholes
J D Hiley
R C McCarthy
(Appointed 20 September 2022)
R T E Capper
(Appointed 18 October 2022)
P Kitchen
(Appointed 18 October 2022)
Company number
08787258
Registered office
The Copper Room
Deva City Office Park
Trinity Way
Manchester
M3 7BG
Auditor
Royce Peeling Green Limited
The Copper Room
Deva City Office Park
Trinity Way
Manchester
M3 7BG
SCHOCROFT COVE LIMITED
CONTENTS
Page
Strategic report
1 - 2
Directors' report
3 - 4
Independent auditor's report
5 - 7
Group statement of comprehensive income
8
Group balance sheet
9
Company balance sheet
10
Group statement of changes in equity
11
Company statement of changes in equity
12
Group statement of cash flows
13
Notes to the financial statements
14 - 31
SCHOCROFT COVE LIMITED
STRATEGIC REPORT
FOR THE YEAR ENDED 30 JANUARY 2023
- 1 -

The directors present the strategic report for the year ended 30 January 2023.

Review of the business

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.

Principal risks and uncertainties

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:

 

 

 

 

SCHOCROFT COVE LIMITED
STRATEGIC REPORT (CONTINUED)
FOR THE YEAR ENDED 30 JANUARY 2023
- 2 -
Other performance indicators

On behalf of the board

R C McCarthy
Director
9 March 2024
SCHOCROFT COVE LIMITED
DIRECTORS' REPORT
FOR THE YEAR ENDED 30 JANUARY 2023
- 3 -

The directors present their annual report and financial statements for the year ended 30 January 2023.

Principal activities

The Group is a leading manufacturer of cup-cakes and other cake products, primarily for major retailers. It works closely with its customers to provide innovative all-year-round and seasonal products, with a focus on customer service and new product development.

 

Schocroft Cove Limited is a holding company with a 100% shareholding in The Cake Crew Limited.

Results and dividends

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.

Directors

The directors who held office during the year and up to the date of signature of the financial statements were as follows:

G J Bancroft
(Resigned 20 September 2022)
P A Scholes
J D Hiley
R C McCarthy
(Appointed 20 September 2022)
R T E Capper
(Appointed 18 October 2022)
P Kitchen
(Appointed 18 October 2022)
Qualifying third party indemnity provisions

The company has made qualifying third party indemnity provisions for the benefit of its directors during the year. These provisions remain in force at the reporting date.

Disabled persons

Applications for employment by disabled persons are always fully considered, bearing in mind the aptitudes of the applicant concerned. In the event of members of staff becoming disabled, every effort is made to ensure that their employment within the group continues and that the appropriate training is arranged. It is the policy of the group that the training, career development and promotion of disabled persons should, as far as possible, be identical to that of other employees.

Employee involvement

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.

Auditor

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.

SCHOCROFT COVE LIMITED
DIRECTORS' REPORT (CONTINUED)
FOR THE YEAR ENDED 30 JANUARY 2023
- 4 -
Statement of directors' responsibilities

The directors are responsible for preparing the Annual Report and the financial statements in accordance with applicable law and regulations.

 

Company law requires the directors to prepare financial statements for each financial year. Under that law the directors have elected to prepare the financial statements in accordance with United Kingdom Generally Accepted Accounting Practice (United Kingdom Accounting Standards and applicable law). Under company law the directors must not approve the financial statements unless they are satisfied that they give a true and fair view of the state of affairs of the group and company, and of the profit or loss of the group for that period. In preparing these financial statements, the directors are required to:

 

 

The directors are responsible for keeping adequate accounting records that are sufficient to show and explain the group’s and company’s transactions and disclose with reasonable accuracy at any time the financial position of the group and company and enable them to ensure that the financial statements comply with the Companies Act 2006. They are also responsible for safeguarding the assets of the group and company and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.

Statement of disclosure to auditor

So far as each person who was a director at the date of approving this report is aware, there is no relevant audit information of which the auditor of the company is unaware. Additionally, the directors individually have taken all the necessary steps that they ought to have taken as directors in order to make themselves aware of all relevant audit information and to establish that the auditor of the company is aware of that information.

On behalf of the board
R C McCarthy
Director
9 March 2024
SCHOCROFT COVE LIMITED
INDEPENDENT AUDITOR'S REPORT
TO THE MEMBERS OF SCHOCROFT COVE LIMITED
- 5 -
Opinion

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).

In our opinion the financial statements:

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:

SCHOCROFT COVE LIMITED
INDEPENDENT AUDITOR'S REPORT (CONTINUED)
TO THE MEMBERS OF SCHOCROFT COVE LIMITED
- 6 -
Matters on which we are required to report by exception

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:

Responsibilities of directors

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.

Auditor's responsibilities for the audit of the financial statements

Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor's report that includes our opinion. Reasonable assurance is a high level of assurance but is not a guarantee that an audit conducted in accordance with ISAs (UK) will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements.

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:

 

SCHOCROFT COVE LIMITED
INDEPENDENT AUDITOR'S REPORT (CONTINUED)
TO THE MEMBERS OF SCHOCROFT COVE LIMITED
- 7 -

 

 

  1. Review of controls set in place by management

  2. Enquiry of management as to whether they consider fraud or other irregularities may have occurred or where such opportunity might exist

  3. Challenge of management assumptions with regard to accounting estimates

  4. 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.

Martin Chatten (Senior Statutory Auditor)
For and on behalf of Royce Peeling Green Limited
12 March 2024
Chartered Accountants
Statutory Auditor
The Copper Room
Deva City Office Park
Trinity Way
Manchester
M3 7BG
SCHOCROFT COVE LIMITED
GROUP STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEAR ENDED 30 JANUARY 2023
- 8 -
2023
2022
Notes
£
£
Turnover
3
25,534,327
21,726,407
Cost of sales
(24,294,419)
(19,811,454)
Gross profit
1,239,908
1,914,953
Administrative expenses
(2,892,870)
(2,470,716)
Other operating income
10,080
160,080
Operating loss
4
(1,642,882)
(395,683)
Interest receivable and similar income
12,161
34,714
Interest payable and similar expenses
9
(622,461)
(354,682)
Amounts written off investments
10
-
380,560
Loss before taxation
(2,253,182)
(335,091)
Tax on loss
11
25,365
(93,155)
Loss for the financial year
(2,227,817)
(428,246)
Loss for the financial year is all attributable to the owners of the parent company.
Total comprehensive income for the year is all attributable to the owners of the parent company.
SCHOCROFT COVE LIMITED
GROUP BALANCE SHEET
AS AT
30 JANUARY 2023
30 January 2023
- 9 -
2023
2022
Notes
£
£
£
£
Fixed assets
Goodwill
13
524,448
709,857
Other intangible assets
13
172,020
242,787
Total intangible assets
696,468
952,644
Tangible assets
14
2,488,198
2,653,049
3,184,666
3,605,693
Current assets
Stocks
17
1,474,128
1,377,790
Debtors
18
4,558,757
4,608,799
Cash at bank and in hand
31,187
39,373
6,064,072
6,025,962
Creditors: amounts falling due within one year
19
(8,218,306)
(8,065,833)
Net current liabilities
(2,154,234)
(2,039,871)
Total assets less current liabilities
1,030,432
1,565,822
Creditors: amounts falling due after more than one year
20
(2,293,056)
(1,175,264)
Provisions for liabilities
Deferred tax liability
23
471,973
497,338
(471,973)
(497,338)
Net liabilities
(1,734,597)
(106,780)
Capital and reserves
Called up share capital
25
600,008
8
Share premium account
99,997
99,997
Profit and loss reserves
(2,434,602)
(206,785)
Total equity
(1,734,597)
(106,780)

These financial statements have been prepared in accordance with the provisions relating to medium-sized groups.

The financial statements were approved by the board of directors and authorised for issue on 7 March 2024 and are signed on its behalf by:
07 March 2024
J D Hiley
R C McCarthy
Director
Director
Company registration number 08787258 (England and Wales)
SCHOCROFT COVE LIMITED
COMPANY BALANCE SHEET
AS AT 30 JANUARY 2023
30 January 2023
- 10 -
2023
2022
Notes
£
£
£
£
Fixed assets
Investments
15
798,085
798,085
Current assets
Debtors
18
-
131,889
Creditors: amounts falling due within one year
19
(64,722)
(801,154)
Net current liabilities
(64,721)
(669,265)
Net assets
733,364
128,820
Capital and reserves
Called up share capital
25
600,008
8
Share premium account
99,997
99,997
Profit and loss reserves
33,359
28,815
Total equity
733,364
128,820

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).

These financial statements have been prepared in accordance with the provisions relating to medium-sized companies.true

The financial statements were approved by the board of directors and authorised for issue on 7 March 2024 and are signed on its behalf by:
07 March 2024
J D Hiley
R C McCarthy
Director
Director
Company registration number 08787258 (England and Wales)
SCHOCROFT COVE LIMITED
GROUP STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 30 JANUARY 2023
- 11 -
Share capital
Share premium account
Profit and loss reserves
Total
Notes
£
£
£
£
Balance at 1 February 2021
8
99,997
521,460
621,465
Year ended 30 January 2022:
Loss and total comprehensive income
-
-
(428,245)
(428,245)
Dividends
12
-
-
(300,000)
(300,000)
Balance at 30 January 2022
8
99,997
(206,785)
(106,780)
Year ended 30 January 2023:
Loss and total comprehensive income
-
-
(2,227,817)
(2,227,817)
Issue of share capital
25
600,000
-
0
-
600,000
Balance at 30 January 2023
600,008
99,997
(2,434,602)
(1,734,597)
SCHOCROFT COVE LIMITED
COMPANY STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 30 JANUARY 2023
- 12 -
Share capital
Share premium account
Profit and loss reserves
Total
Notes
£
£
£
£
Balance at 1 February 2021
8
99,997
14,184
114,189
Year ended 30 January 2022:
Profit and total comprehensive income for the year
-
-
314,631
314,631
Dividends
12
-
-
(300,000)
(300,000)
Balance at 30 January 2022
8
99,997
28,815
128,820
Year ended 30 January 2023:
Profit and total comprehensive income
-
-
4,544
4,544
Issue of share capital
25
600,000
-
0
-
600,000
Balance at 30 January 2023
600,008
99,997
33,359
733,364
SCHOCROFT COVE LIMITED
GROUP STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED 30 JANUARY 2023
- 13 -
2023
2022
Notes
£
£
£
£
Cash flows from operating activities
Cash (absorbed by)/generated from operations
30
(645,038)
751,862
Interest paid
(622,662)
(354,682)
Income taxes paid
-
(150,795)
Net cash (outflow)/inflow from operating activities
(1,267,700)
246,385
Investing activities
Purchase of intangible assets
-
(56,303)
Purchase of tangible fixed assets
(204,410)
(254,473)
Interest received
12,161
10,376
Net cash used in investing activities
(192,249)
(300,400)
Financing activities
Movement in CID facility
240,365
438,383
New borrowings
1,598,000
-
Repayment of bank loans
(210,233)
(217,877)
Payment of finance leases obligations
(176,369)
(215,629)
Dividends paid to equity shareholders
-
0
(300,000)
Net cash generated from/(used in) financing activities
1,451,763
(295,123)
Net decrease in cash and cash equivalents
(8,186)
(349,138)
Cash and cash equivalents at beginning of year
39,373
388,511
Cash and cash equivalents at end of year
31,187
39,373
SCHOCROFT COVE LIMITED
NOTES TO THE GROUP FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JANUARY 2023
- 14 -
1
Accounting policies
Company information

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.

1.1
Accounting convention

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.

1.2
Business combinations

In the parent company financial statements, the cost of a business combination is the fair value at the acquisition date of the assets given, equity instruments issued and liabilities incurred or assumed, plus costs directly attributable to the business combination. The excess of the cost of a business combination over the fair value of the identifiable assets, liabilities and contingent liabilities acquired is recognised as goodwill. The cost of the combination includes the estimated amount of contingent consideration that is probable and can be measured reliably, and is adjusted for changes in contingent consideration after the acquisition date. Provisional fair values recognised for business combinations in previous periods are adjusted retrospectively for final fair values determined in the 12 months following the acquisition date. Investments in subsidiaries, joint ventures and associates are accounted for at cost less impairment.

 

Deferred tax is recognised on differences between the value of assets (other than goodwill) and liabilities recognised in a business combination accounted for using the purchase method and the amounts that can be deducted or assessed for tax, considering the manner in which the carrying amount of the asset or liability is expected to be recovered or settled. The deferred tax recognised is adjusted against goodwill or negative goodwill.

1.3
Basis of consolidation

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.

SCHOCROFT COVE LIMITED
NOTES TO THE GROUP FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 30 JANUARY 2023
1
Accounting policies
(Continued)
- 15 -
1.4
Going concern

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.

1.5
Turnover

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.

1.6
Research and development expenditure

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.

1.7
Intangible fixed assets - goodwill

Goodwill represents the excess of the cost of acquisition of a business or a subsidiary over the fair value of net assets acquired. It is initially recognised as an asset at cost and is subsequently measured at cost less accumulated amortisation and impairment losses. Goodwill is considered to have a finite useful life and is amortised on a systematic basis over its expected life of no more than 10 years.

 

For the purposes of impairment testing, goodwill is allocated to the cash-generating units expected to benefit from the acquisition. Cash-generating units to which goodwill has been allocated are tested for impairment at least annually, or more frequently when there is an indication that the unit may be impaired. If the recoverable amount of the cash-generating unit is less than the carrying amount of the unit, the impairment loss is allocated first to reduce the carrying amount of any goodwill allocated to the unit and then to the other assets of the unit pro-rata on the basis of the carrying amount of each asset in the unit.

1.8
Intangible fixed assets other than goodwill

Intangible assets acquired separately from a business are recognised at cost and are subsequently measured at cost less accumulated amortisation and accumulated impairment losses.

Amortisation is recognised so as to write off the cost or valuation of assets less their residual values over their useful lives on the following bases:

Development costs
25% straight line
SCHOCROFT COVE LIMITED
NOTES TO THE GROUP FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 30 JANUARY 2023
1
Accounting policies
(Continued)
- 16 -
1.9
Tangible fixed assets

Tangible fixed assets are initially measured at cost and subsequently measured at cost or valuation, net of depreciation and any impairment losses.

Depreciation is recognised so as to write off the cost or valuation of assets less their residual values over their useful lives on the following bases:

Leasehold improvements
10% straight line
Plant and equipment
20% straight line
Fixtures and fittings
20% straight line

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.

1.10
Fixed asset investments

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.

1.11
Impairment of fixed assets

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.

SCHOCROFT COVE LIMITED
NOTES TO THE GROUP FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 30 JANUARY 2023
1
Accounting policies
(Continued)
- 17 -
1.12
Stocks

Stocks are stated at the lower of cost and estimated selling price less costs to complete and sell. Cost comprises direct materials and, where applicable, direct labour costs and those overheads that have been incurred in bringing the stocks to their present location and condition.

 

Stocks held for distribution at no or nominal consideration are measured at the lower of cost and replacement cost, adjusted where applicable for any loss of service potential.

At each reporting date, an assessment is made for impairment. Any excess of the carrying amount of stocks over its estimated selling price less costs to complete and sell is recognised as an impairment loss in profit or loss. Reversals of impairment losses are also recognised in profit or loss.

1.13
Cash and cash equivalents

Cash and cash equivalents are basic financial assets and include cash in hand, deposits held at call with banks, other short-term liquid investments with original maturities of three months or less, and bank overdrafts. Bank overdrafts are shown within borrowings in current liabilities.

1.14
Financial instruments

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

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

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.

Impairment of financial assets

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.

SCHOCROFT COVE LIMITED
NOTES TO THE GROUP FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 30 JANUARY 2023
1
Accounting policies
(Continued)
- 18 -

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.

Derecognition of financial assets

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.

Classification of financial liabilities

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

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.

Derecognition of financial liabilities

Financial liabilities are derecognised when the group's contractual obligations expire or are discharged or cancelled.

1.15
Equity instruments

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.

1.16
Taxation

The tax expense represents the sum of the tax currently payable and deferred tax.

Current 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

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.

SCHOCROFT COVE LIMITED
NOTES TO THE GROUP FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 30 JANUARY 2023
1
Accounting policies
(Continued)
- 19 -

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.

1.17
Employee benefits

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.

1.18
Retirement benefits

Payments to defined contribution retirement benefit schemes are charged as an expense as they fall due.

1.19
Leases

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.

1.20
Government grants

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.

1.21
Foreign exchange

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.

1.22

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.

SCHOCROFT COVE LIMITED
NOTES TO THE GROUP FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 30 JANUARY 2023
- 20 -
2
Judgements and key sources of estimation uncertainty

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.

Critical judgements

The following judgements (apart from those involving estimates) have had the most significant effect on amounts recognised in the financial statements.

Stock provisioning

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.

Development cost amortisation rates

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.

3
Turnover and other revenue
2023
2022
£
£
Turnover analysed by class of business
Manufacture of cup-cakes and other cake products in the UK
25,534,327
21,726,407
2023
2022
£
£
Other revenue
Interest income
12,161
34,714
Grants received
10,080
160,080
4
Operating loss
2023
2022
£
£
Operating loss for the year is stated after charging/(crediting):
Government grants
(10,080)
(160,080)
Depreciation of owned tangible fixed assets
400,077
369,290
Depreciation of tangible fixed assets held under finance leases
38,682
58,445
Amortisation of intangible assets
256,176
245,731
Operating lease charges
191,549
175,158
SCHOCROFT COVE LIMITED
NOTES TO THE GROUP FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 30 JANUARY 2023
- 21 -
5
Auditor's remuneration
2023
2022
Fees payable to the company's auditor and associates:
£
£
For audit services
Audit of the financial statements of the group and company
5,000
5,000
Audit of the financial statements of the company's subsidiaries
15,465
15,019
20,465
20,019
For other services
Taxation compliance services
2,000
2,000
6
Employees

The average monthly number of persons (including directors) employed by the group and company during the year was:

Group
Company
2023
2022
2023
2022
Number
Number
Number
Number
Production
262
288
3
3
Adminstration
17
14
-
-
Management
2
2
-
-
Total
281
304
3
3

Their aggregate remuneration comprised:

Group
Company
2023
2022
2023
2022
£
£
£
£
Wages and salaries
7,538,188
7,470,233
-
0
-
0
Social security costs
698,494
634,589
-
-
Pension costs
150,190
156,588
-
0
-
0
8,212,941
8,261,410
-
0
-
0
7
Directors' remuneration
2023
2022
£
£
Remuneration for qualifying services
383,419
190,751
Company pension contributions to defined contribution schemes
36,094
-
419,513
317,607
SCHOCROFT COVE LIMITED
NOTES TO THE GROUP FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 30 JANUARY 2023
7
Directors' remuneration
(Continued)
- 22 -
Remuneration disclosed above includes the following amounts paid to the highest paid director:
2023
2022
£
£
Remuneration for qualifying services
101,305
114,167
Company pension contributions to defined contribution schemes
29,031
20,277

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.

8
Retirement benefit schemes
2023
2022
£
£
Charge to profit or loss in respect of defined contribution schemes
150,190
156,588

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.

9
Interest payable and similar expenses
2023
2022
£
£
Interest on financial liabilities measured at amortised cost:
Interest on bank overdrafts and loans
1,940
5,603
Interest on invoice finance arrangements
253,108
136,249
Other interest on financial liabilities
337,729
292,103
592,777
433,955
Other finance costs:
Interest on finance leases and hire purchase contracts
26,498
26,969
Other interest
3,186
3,642
Total finance costs
622,461
464,566
10
Amounts written off investments
2023
2022
£
£
Amounts written back to financial liabilities
-
380,560
SCHOCROFT COVE LIMITED
NOTES TO THE GROUP FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 30 JANUARY 2023
- 23 -
11
Taxation
2023
2022
£
£
Current tax
UK corporation tax on profits for the current period
-
0
(29,218)
Deferred tax
Origination and reversal of timing differences
(25,318)
3,012
Changes in tax rates
-
0
119,361
Adjustment in respect of prior periods
(47)
-
0
Total deferred tax
(25,365)
122,373
Total tax (credit)/charge
(25,365)
93,155

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:

2023
2022
£
£
Loss before taxation
(2,253,182)
(335,091)
Expected tax credit based on the standard rate of corporation tax in the UK of 19.00% (2022: 19.00%)
(428,105)
(63,667)
Tax effect of expenses that are not deductible in determining taxable profit
68,309
47,078
Unutilised tax losses carried forward
344,209
4,309
Adjustments in respect of prior years
47
-
0
Effect of change in corporation tax rate
-
119,361
ACA superdeduction
(13,446)
(14,617)
Other
3,621
691
Taxation (credit)/charge
(25,365)
93,155

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.

12
Dividends
2023
2022
Recognised as distributions to equity holders:
£
£
Interim paid
-
300,000
SCHOCROFT COVE LIMITED
NOTES TO THE GROUP FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 30 JANUARY 2023
- 24 -
13
Intangible fixed assets
Group
Goodwill
Development costs
Total
£
£
£
Cost
At 31 January 2022 and 30 January 2023
1,962,888
564,422
2,527,310
Amortisation and impairment
At 31 January 2022
1,253,031
321,635
1,574,666
Amortisation charged for the year
185,409
70,767
256,176
At 30 January 2023
1,438,440
392,402
1,830,842
Carrying amount
At 30 January 2023
524,448
172,020
696,468
At 30 January 2022
709,857
242,787
952,644
The company had no intangible fixed assets at 30 January 2023 or 30 January 2022.
14
Tangible fixed assets
Group
Leasehold improvements
Plant and equipment
Fixtures and fittings
Total
£
£
£
£
Cost
At 31 January 2022
607,555
3,694,453
207,827
4,509,835
Additions
38,314
213,095
22,499
273,908
At 30 January 2023
645,869
3,907,548
230,326
4,783,743
Depreciation and impairment
At 31 January 2022
205,477
1,562,807
88,502
1,856,786
Depreciation charged in the year
60,392
345,764
32,603
438,759
At 30 January 2023
265,869
1,908,571
121,105
2,295,545
Carrying amount
At 30 January 2023
380,000
1,998,977
109,221
2,488,198
At 30 January 2022
402,078
2,131,646
119,325
2,653,049
The company had no tangible fixed assets at 30 January 2023 or 30 January 2022.
SCHOCROFT COVE LIMITED
NOTES TO THE GROUP FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 30 JANUARY 2023
14
Tangible fixed assets
(Continued)
- 25 -

The net carrying value of tangible fixed assets includes the following in respect of assets held under finance leases or hire purchase contracts.

Group
Company
2023
2022
2023
2022
£
£
£
£
Plant and equipment
487,274
599,280
-
0
-
0
15
Fixed asset investments
Group
Company
2023
2022
2023
2022
Notes
£
£
£
£
Investments in subsidiaries
16
-
-
798,085
798,085
16
Subsidiaries

Details of the company's subsidiaries at 30 January 2023 are as follows:

Name of undertaking
Address
Nature of business
Class of
% Held
shares held
Direct
The Cake Crew Limited
1
Bakery
Ordinary
100.00

Registered office addresses (all UK unless otherwise indicated):

1
Units 11-12, Enterprise Park, Bala, Gwynedd LL23 7NL
The aggregate capital and reserves and the result for the year of the subsidiaries noted above was as follows:
Name of undertaking
Capital and Reserves
Profit/(Loss)
£
£
The Cake Crew Limited
(2,194,324)
(2,046,952)
17
Stocks
Group
Company
2023
2022
2023
2022
£
£
£
£
Raw materials and consumables
1,157,136
1,059,267
-
-
Finished goods and goods for resale
316,992
318,523
-
0
-
0
1,474,128
1,377,790
-
-
SCHOCROFT COVE LIMITED
NOTES TO THE GROUP FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 30 JANUARY 2023
- 26 -
18
Debtors
Group
Company
2023
2022
2023
2022
Amounts falling due within one year:
£
£
£
£
Trade debtors
3,790,078
3,231,423
-
-
0
Other debtors
235,191
835,703
-
131,889
Prepayments and accrued income
533,488
541,673
-
0
-
0
4,558,757
4,608,799
-
131,889

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.

19
Creditors: amounts falling due within one year
Group
Company
2023
2022
2023
2022
Notes
£
£
£
£
Debenture loans
21
3,271,643
3,031,278
-
0
-
0
Bank loans
21
742,450
570,566
-
0
-
0
Obligations under finance leases
22
148,001
166,861
-
0
-
0
Other borrowings
21
729,440
729,440
Trade creditors
3,042,767
2,707,636
-
0
-
0
Amounts owed to group undertakings
-
0
-
0
62,628
69,620
Corporation tax payable
2,093
2,295
2,093
2,094
Other taxation and social security
439,078
440,327
-
-
Other creditors
133,400
105,319
-
0
-
0
Accruals and deferred income
438,874
312,111
-
0
-
0
8,218,306
8,065,833
64,721
801,154
20
Creditors: amounts falling due after more than one year
Group
Company
2023
2022
2023
2022
Notes
£
£
£
£
Bank loans and overdrafts
21
587,288
969,405
-
0
-
0
Obligations under finance leases
22
90,128
178,139
-
0
-
0
Other borrowings
21
1,598,000
-
0
-
0
-
0
Government grants
24
17,640
27,720
-
0
-
0
2,293,056
1,175,264
-
-
SCHOCROFT COVE LIMITED
NOTES TO THE GROUP FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 30 JANUARY 2023
- 27 -
21
Loans and overdrafts
Group
Company
2023
2022
2023
2022
£
£
£
£
Debenture loans
3,271,643
3,031,278
-
0
-
0
Bank loans
1,329,738
1,539,971
-
0
-
0
Other loans
1,598,000
729,440
-
0
729,440
6,199,381
5,300,689
-
729,440
Payable within one year
4,014,093
4,331,284
-
0
729,440
Payable after one year
2,185,288
969,405
-
0
-
0

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.

22
Finance lease obligations
Group
Company
2023
2022
2023
2022
£
£
£
£
Future minimum lease payments due under finance leases:
Within one year
167,901
184,954
-
0
-
0
In two to five years
85,472
186,542
-
0
-
0
253,373
371,496
-
-
Less: future finance charges
(15,244)
(26,496)
-
0
-
0
238,129
345,000
-
0
-
0

Amounts owed under finance leases are secured against the underlying assets to which the finance relates

SCHOCROFT COVE LIMITED
NOTES TO THE GROUP FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 30 JANUARY 2023
- 28 -
23
Deferred taxation

The following are the major deferred tax liabilities and assets recognised by the group and company, and movements thereon:

Liabilities
Liabilities
2023
2022
Group
£
£
Accelerated capital allowances
476,784
500,807
Retirement benefit obligations
(4,811)
(3,469)
471,973
497,338
The company has no deferred tax assets or liabilities.
Group
Company
2023
2023
Movements in the year:
£
£
Liability at 31 January 2022
497,338
-
Credit to profit or loss
(25,365)
-
Liability at 30 January 2023
471,973
-
24
Government grants
Group
Company
2023
2022
2023
2022
£
£
£
£
Arising from government grants
17,640
27,720
-
-
25
Share capital
Group and company
2023
2022
2023
2022
Ordinary share capital
Number
Number
£
£
Issued and fully paid
A ordinary shares of 1p each
750
750
8
8
B ordinary shares of 1p each
32
24
-
-
C ordinary shares of 1p each
32
-
-
-
Preferred ordinary shares of £1 each
600,000
-
600,000
-
600,814
774
600,008
8
SCHOCROFT COVE LIMITED
NOTES TO THE GROUP FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 30 JANUARY 2023
25
Share capital
(Continued)
- 29 -

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.

26
Operating lease commitments

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:

Group
Company
2023
2022
2023
2022
£
£
£
£
Within one year
47,906
83,816
-
-
Between two and five years
43,419
67,992
-
-
91,325
151,808
-
-
SCHOCROFT COVE LIMITED
NOTES TO THE GROUP FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 30 JANUARY 2023
- 30 -
27
Related party transactions
Remuneration of key management personnel
2023
2022
£
£
Aggregate compensation
541,059
351,875
Transactions with related parties

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.

28
Directors' transactions

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.

29
Events after the reporting date

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:-

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.

SCHOCROFT COVE LIMITED
NOTES TO THE GROUP FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 30 JANUARY 2023
- 31 -
30
Cash (absorbed by)/generated from group operations
2023
2022
£
£
Loss for the year after tax
(2,227,817)
(428,245)
Adjustments for:
Taxation (credited)/charged
(25,365)
93,155
Finance costs
622,461
(60,592)
Investment income
(12,161)
-
Amortisation and impairment of intangible assets
256,176
245,731
Depreciation and impairment of tangible fixed assets
438,759
427,735
Movements in working capital:
Increase in stocks
(96,338)
(188,695)
(Increase)/decrease in debtors
(79,398)
79,318
Increase in creditors
488,725
593,537
Decrease in deferred income
(10,080)
(10,080)
Cash (absorbed by)/generated from operations
(645,038)
751,864
31
Analysis of changes in net debt - group
31 January 2022
Cash flows
New finance leases
30 January 2023
£
£
£
£
Cash at bank and in hand
39,373
(8,186)
-
31,187
Borrowings excluding overdrafts
(5,300,689)
(898,692)
-
(6,199,381)
Obligations under finance leases
(345,000)
176,369
(69,498)
(238,129)
(5,606,316)
(730,509)
(69,498)
(6,406,323)
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