Company registration number 07738348 (England and Wales)
THE CAKE CREW LIMITED
ANNUAL REPORT AND FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JANUARY 2023
THE CAKE CREW LIMITED
COMPANY INFORMATION
Directors
P A Scholes
J D Hiley
(Appointed 20 September 2022)
R C McCarthy
(Appointed 20 September 2022)
R T E Capper
(Appointed 18 October 2022)
P Kitchen
(Appointed 18 October 2022)
Company number
07738348
Registered office
Units 11-12
Enterprise Park
Bala
Gwynedd
LL23 7NL
Auditor
Royce Peeling Green Limited
The Copper Room
Deva City Office Park
Trinity Way
Manchester
M3 7BG
THE CAKE CREW LIMITED
CONTENTS
Page
Strategic report
1 - 2
Directors' report
3 - 4
Independent auditor's report
5 - 7
Statement of comprehensive income
8
Balance sheet
9
Statement of changes in equity
10
Notes to the financial statements
11 - 24
THE CAKE CREW LIMITED
STRATEGIC REPORT
FOR THE YEAR ENDED 30 JANUARY 2023
- 1 -

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

Principal activities

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

Business performance

In the year to January 2023 The Cake Crew 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 company’s products and from Brexit on the availability of labour.

In the year to January 2023 the company 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 company’s margin was heavily eroded and the company incurred a material loss for the year to January 2023.

The company 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 company 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 company 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 company’s challenges and opportunities as well as its ongoing operational and financial performance.

 

The Directors have considered and mitigated the risk profile of the company during the financial period:

 

 

 

 

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

On behalf of the board

R C McCarthy
Director
1 March 2024
THE CAKE CREW 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 principal activity of the company is the manufacture and distribution of cake products to retailers.

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 final dividend.

Directors

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

G J Bancroft
(Resigned 20 September 2022)
P A Scholes
J D Hiley
(Appointed 20 September 2022)
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 company continues and that the appropriate training is arranged. It is the policy of the company 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 company's policy is to consult and discuss with employees on 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 company's performance.

 

There is no employee share scheme at present but the directors encourage the involvement of employees in enhancing the company's performance.

Auditor

The auditor, Royce Peeling Green Limited, is deemed to be reappointed under S487(2) of the Companies Act 2006.

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

The director is responsible for preparing the Director's 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 company and of the profit or loss of the company for that period. In preparing these financial statements, the directors are required to:

 

- select suitable accounting policies and then apply them consistently;

- make judgements and accounting estimates that are reasonable and prudent;

- state whether applicable UK Accounting Standards have been followed, subject to any material departures disclosed and explained in the financial statements;

- prepare the financial statements on the going concern basis unless it is inappropriate to presume that the company will continue in business.

 

The directors are responsible for keeping adequate accounting records that are sufficient to show and explain the company’s transactions and disclose with reasonable accuracy at any time the financial position of the 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 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 company’s auditor 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 company’s auditor is aware of that information.

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

We have audited the financial statements of The Cake Crew Limited (the 'company') for the year ended 30 January 2023 which comprise the statement of comprehensive income, the balance sheet, the statement of changes in equity 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 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 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 CAKE CREW LIMITED
INDEPENDENT AUDITOR'S REPORT (CONTINUED)
TO THE MEMBERS OF THE CAKE CREW LIMITED
- 6 -
Matters on which we are required to report by exception

In the light of the knowledge and understanding of the company and its 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 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 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.

The extent to which our procedures are capable of detecting irregularities, including fraud, is detailed below.

 

  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 for the audit of the financial statements is located on the FRC’s website at: http://www.frc.org.uk/auditorsresponsibilities. This description forms part of our auditor’s report.

THE CAKE CREW LIMITED
INDEPENDENT AUDITOR'S REPORT (CONTINUED)
TO THE MEMBERS OF THE CAKE CREW LIMITED
- 7 -

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
THE CAKE CREW LIMITED
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
(2,760,403)
(1,906,807)
Other operating income
10,080
160,080
Operating (loss)/profit
4
(1,510,415)
168,226
Interest receivable and similar income
5,890
16,220
Interest payable and similar expenses
8
(567,792)
(348,759)
Loss before taxation
(2,072,317)
(164,313)
Tax on loss
9
25,365
(93,155)
Loss for the financial year
(2,046,952)
(257,468)

The profit and loss account has been prepared on the basis that all operations are continuing operations.

THE CAKE CREW LIMITED
BALANCE SHEET
AS AT
30 JANUARY 2023
30 January 2023
- 9 -
2023
2022
Notes
£
£
£
£
Fixed assets
Intangible assets
10
172,020
242,787
Tangible assets
11
2,488,198
2,653,049
2,660,218
2,895,836
Current assets
Stocks
12
1,474,128
1,377,790
Debtors
13
4,621,384
4,546,530
Cash at bank and in hand
31,187
39,373
6,126,699
5,963,693
Creditors: amounts falling due within one year
14
(8,216,212)
(7,334,299)
Net current liabilities
(2,089,513)
(1,370,606)
Total assets less current liabilities
570,705
1,525,230
Creditors: amounts falling due after more than one year
15
(2,293,056)
(1,175,264)
Provisions for liabilities
(471,973)
(497,338)
Net liabilities
(2,194,324)
(147,372)
Capital and reserves
Called up share capital
19
148
148
Share premium account
59,852
59,852
Other reserves
20
5,000
5,000
Profit and loss reserves
(2,259,324)
(212,372)
Total equity
(2,194,324)
(147,372)
The financial statements were approved by the board of directors and authorised for issue on 1 March 2024 and are signed on its behalf by:
J D Hiley
R C McCarthy
Director
Director
Company Registration No. 07738348
THE CAKE CREW LIMITED
STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 30 JANUARY 2023
- 10 -
Share capital
Share premium account
Profit and loss reserves
Total
Notes
£
£
£
£
£
Balance at 1 February 2021
148
59,852
5,000
345,096
410,096
Year ended 30 January 2022:
Loss and total comprehensive income
-
-
-
(257,468)
(257,468)
Dividends
-
-
-
(300,000)
(300,000)
Balance at 30 January 2022
148
59,852
5,000
(212,372)
(147,372)
Year ended 30 January 2023:
Loss and total comprehensive income
-
-
-
(2,046,952)
(2,046,952)
Balance at 30 January 2023
148
59,852
5,000
(2,259,324)
(2,194,324)
THE CAKE CREW LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JANUARY 2023
- 11 -
1
Accounting policies
Company information

The Cake Crew Limited is a private company limited by shares incorporated in England and Wales. The registered office is Units 11-12, Enterprise Park, Bala, Gwynedd, LL23 7NL.

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. The principal accounting policies adopted are set out below.

The Cake Crew Limited is a wholly owned subsidiary of Schocroft Cove Limited and its results are included in its consolidated financial statements which are available from Companies House. The company has accordingly taken advantage of the exemption available not to prepare a cash flow statement.

1.2
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.true

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 the year to January 2023 and provided funding to invest in the recovery of the business in the year to January 2024 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.

1.3
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.

1.4
Research and development expenditure

Research expenditure is written off against profits in the year in which it is incurred. Identifiable development expenditure is capitalised to the extent that the technical, commercial and financial feasibility can be demonstrated.

THE CAKE CREW LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 30 JANUARY 2023
1
Accounting policies
(Continued)
- 12 -
1.5
Intangible fixed assets - goodwill

Acquired goodwill is written off in equal instalments over its estimated useful economic life of 10 years.

1.6
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 of assets less their residual values from the point of operational completion over their useful lives on the following bases:

Development costs
25% straight line
1.7
Tangible fixed assets

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

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

Leasehold improvements
10% straight line
Plant and machinery
10% / 20% straight line
Fixtures, fittings & equipment
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 credited or charged to profit or loss.

1.8
Impairment of fixed assets

At each reporting period end date, the company 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.

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.

1.9
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.

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.

THE CAKE CREW LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 30 JANUARY 2023
1
Accounting policies
(Continued)
- 13 -
1.10
Cash at bank and in hand

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.

1.11
Financial instruments

The company 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 company's balance sheet when the company becomes party to the contractual provisions of the instrument.

 

Financial assets and liabilities are offset, with 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.

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.

 

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 company 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 company after deducting all of its liabilities.

THE CAKE CREW LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 30 JANUARY 2023
1
Accounting policies
(Continued)
- 14 -
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 company’s contractual obligations expire or are discharged or cancelled.

1.12
Equity instruments

Equity instruments issued by the company 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 company.

1.13
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 company’s liability for current tax is calculated using tax rates that have been enacted or 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.

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.

1.14
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.

1.15
Retirement benefits

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

THE CAKE CREW LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 30 JANUARY 2023
1
Accounting policies
(Continued)
- 15 -
1.16
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 leases asset are consumed.

1.17
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. Government grants relating to turnover are recognised as income over the periods when the related costs are incurred. Grants relating to an asset are recognised in income systematically over the asset's expected useful life. If part of such a grant is deferred it is recognised as deferred income rather than being deducted from the asset's carrying amount.

1.18
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.

2
Judgements and key sources of estimation uncertainty

In the application of the company’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.

 

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 those periods.

Critical judgements

The following judgements 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.

THE CAKE CREW LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 30 JANUARY 2023
- 16 -
3
Turnover

All turnover relates to the manufacture of cake and related products sold into the UK grocery market.

4
Operating (loss)/profit
2023
2022
Operating (loss)/profit for the year is stated after charging/(crediting):
£
£
Government grants
(10,080)
(160,080)
Fees payable to the company's auditor for the audit of the company's financial statements
15,465
15,019
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
70,767
60,322
Operating lease charges
191,549
175,158
5
Employees

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

2023
2022
Number
Number
Production
262
288
Administration
17
14
Management
2
2
281
304
Their aggregate remuneration comprised:
£
£
Wages and salaries
7,364,257
7,105,393
Social security costs
698,494
634,589
Pension costs
150,190
156,588
8,212,941
7,896,570
6
Retirement benefit schemes
2023
2022
£
£
Charge to profit or loss in respect of defined contribution schemes
150,190
156,588

The company operates a defined contribution pension scheme for all qualifying employees. The assets of the scheme are held separately from those of the company in an independently administered fund.

THE CAKE CREW LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 30 JANUARY 2023
- 17 -
7
Directors' remuneration
2023
2022
£
£
Remuneration for qualifying services
325,086
55,000
Company pension contributions to defined contribution schemes
19,159
1,307
344,245
56,307

The number of directors for whom retirement benefits are accruing under defined contribution schemes amounted to 4 (2022 - 2).

Remuneration disclosed above include the following amounts paid to the highest paid director:
2023
2022
£
£
Remuneration for qualifying services
129,281
55,000
Company pension contributions to defined contribution schemes
763
653

Directors' remuneration and highest paid director remuneration include an amount of £96,000 paid to a company of which a director of the company was also a director and 100% shareholder for consultancy services.

8
Interest payable and similar expenses
2023
2022
£
£
Interest on bank overdrafts and loans
1,940
5,603
Interest on invoice finance arrangements
253,108
136,249
Interest on other financial liabilities
283,060
176,296
Interest on finance leases and hire purchase contracts
26,498
26,969
Other interest
3,186
3,642
567,792
348,759
THE CAKE CREW LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 30 JANUARY 2023
- 18 -
9
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
(2,072,317)
(164,313)
Expected tax credit based on the standard rate of corporation tax in the UK of 19.00% (2022: 19.00%)
(393,740)
(31,219)
Tax effect of expenses that are not deductible in determining taxable profit
30,421
-
0
Unutilised tax losses carried forward
344,209
4,309
Adjustments in respect of prior years
47
-
0
Effect of change in corporation tax rate
-
0
119,361
Group relief
3,523
2,780
Depreciation on assets not qualifying for tax allowances
-
0
11,850
Capital allowance super deduction
(13,446)
(14,617)
Other
3,621
691
Taxation (credit)/charge for the year
(25,365)
93,155

The company 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 CAKE CREW LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 30 JANUARY 2023
- 19 -
10
Intangible fixed assets
Goodwill
Development costs
Total
£
£
£
Cost
At 31 January 2022 and 30 January 2023
105,030
564,422
669,452
Amortisation and impairment
At 31 January 2022
105,030
321,635
426,665
Amortisation charged for the year
-
0
70,767
70,767
At 30 January 2023
105,030
392,402
497,432
Carrying amount
At 30 January 2023
-
0
172,020
172,020
At 30 January 2022
-
0
242,787
242,787
11
Tangible fixed assets
Leasehold improvements
Plant and machinery
Fixtures, fittings & equipment
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 net carrying value of tangible fixed assets includes the following in respect of assets held under finance leases or hire purchase contracts.

2023
2022
£
£
Plant and machinery
487,274
599,280
THE CAKE CREW LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 30 JANUARY 2023
- 20 -
12
Stocks
2023
2022
£
£
Raw materials and consumables
1,157,136
1,059,267
Finished goods and goods for resale
316,992
318,523
1,474,128
1,377,790
13
Debtors
2023
2022
Amounts falling due within one year:
£
£
Trade debtors
3,790,079
3,231,423
Amounts owed by group undertakings
62,627
69,674
Other debtors
235,190
703,760
Prepayments and accrued income
533,488
541,673
4,621,384
4,546,530

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.

 

14
Creditors: amounts falling due within one year
2023
2022
Notes
£
£
Invoice discounting facility
16
3,271,643
3,031,278
Loans
16
742,450
570,566
Obligations under finance leases
17
148,001
166,861
Trade creditors
3,042,766
2,707,636
Corporation tax
-
0
201
Other taxation and social security
439,078
440,327
Other creditors
133,400
105,319
Accruals and deferred income
438,874
312,111
8,216,212
7,334,299
THE CAKE CREW LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 30 JANUARY 2023
- 21 -
15
Creditors: amounts falling due after more than one year
2023
2022
Notes
£
£
Loans
16
587,288
969,405
Obligations under finance leases
17
90,128
178,139
Other loans
22, 23
1,598,000
-
0
Government grants
17,640
27,720
2,293,056
1,175,264
16
Loans and overdrafts
2023
2022
£
£
Invoice discounting facility
3,271,643
3,031,278
Loans
1,329,738
1,539,971
Other loans (see notes 22 and 23)
1,598,000
-
0
6,199,381
4,571,249
Payable within one year
4,014,093
3,601,844
Payable after one year
2,185,288
969,405

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.

17
Finance lease obligations
2023
2022
Future minimum lease payments due under finance leases:
£
£
Within one year
167,901
184,954
In two to five years
85,472
186,542
253,373
371,496
Less: future finance charges
(15,244)
(26,496)
238,129
345,000

Finance lease obligations are secured by fixed charges on the assets concerned.

THE CAKE CREW LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 30 JANUARY 2023
- 22 -
18
Deferred taxation

Deferred tax assets and liabilities are offset where the company has a legally enforceable right to do so. The following is the analysis of the deferred tax balances (after offset) for financial reporting purposes:

Liabilities
Liabilities
2023
2022
Balances:
£
£
Accelerated capital allowances
476,784
500,807
Short term timing differences
(4,811)
(3,469)
471,973
497,338
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
19
Share capital
2023
2022
£
£
Ordinary share capital
Issued and fully paid
14,810 Ordinary shares of 1p each
148
148
20
Other reserves
On 29 October 2012, 740 Ordinary shares of £0.01 each were issued at a value less than comparable shares issued on the same date; this reduced price was in lieu of services rendered to the company. The fair value of the services rendered has been debited to profit and loss in the period and an equivalent amount credited to other reserves.
21
Operating lease commitments - lessee

At the reporting end date the company had outstanding commitments for future minimum lease payments under non-cancellable operating leases, which fall due as follows:

2023
2022
£
£
Within one year
47,906
83,816
Between two and five years
43,419
67,992
91,325
151,808
THE CAKE CREW LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 30 JANUARY 2023
- 23 -
22
Related party transactions

The company has taken advantage of the exemption in FRS 102 from the requirement to disclose transactions with wholly owned group companies on the grounds that consolidated financial statements are prepared by the parent company.

 

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.

23
Directors' transactions

At the year end the directors had loans totalling £90,375 (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.

THE CAKE CREW LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 30 JANUARY 2023
- 24 -
24
Controlling party

The Cake Crew Limited is a wholly owned subsidiary of Schocroft Cove Limited, a company registered in England & Wales.

 

25
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.

The directors have determined that these events are non-adjusting subsequent events.

 

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