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Registered number: 01746071










MASTEROAST COFFEE CO. LIMITED










ANNUAL REPORT AND FINANCIAL STATEMENTS

FOR THE YEAR ENDED 31 DECEMBER 2023

 
MASTEROAST COFFEE CO. LIMITED
 
 
COMPANY INFORMATION


Directors
Mr L G Mills - Chairman 
Mrs Y E V Mills 
Mr A G Fawkes 
Mr M C Mills 




Company secretary
Mrs Y E V Mills



Registered number
01746071



Registered office
Plantation House
Newark Road

Peterborough

PE1 5UA




Independent auditors
MHA
Chartered Accountants & Statutory Auditors

1 The Forum

Minerva Business Park

Lynch Wood

Peterborough

PE2 6FT





 
MASTEROAST COFFEE CO. LIMITED
 

CONTENTS



Page
Strategic Report
 
1 - 2
Directors' Report
 
3 - 6
Independent Auditors' Report
 
7 - 10
Statement of Comprehensive Income
 
11
Balance Sheet
 
12
Statement of Changes in Equity
 
13
Notes to the Financial Statements
 
14 - 30


 
MASTEROAST COFFEE CO. LIMITED
 
 
STRATEGIC REPORT
FOR THE YEAR ENDED 31 DECEMBER 2023

Introduction
 
The directors present their strategic report for the year ended 31 December 2023.
 

Principal activities and Business review
 
The principal activities of Masteroast Coffee Co. Limited ("the Compnay") during the year were those of coffee roasters, tea blenders and wholesalers.
A business review is provided in the Chairman's statement within the Directors' report.

Principal risks and uncertainties
 
The directors generate an annual budget which is monitored on a monthly basis. However the key risks to the Company remain that of the fluctuations in coffee bean prices and the US dollar exchange rate. Both of these can have a major impact on the margins made as well as giving rise to exchange rate variances.
The Company constantly monitors the coffee price and exchange rates, and changes prices when it is considered commercial to do so.
The Company has various financial instruments including but not limited to the bank overdraft, the main purpose of which is to raise finance for the Company's operations. In addition, the Company has various other financial assets and liabilities such as trade debtors and trade creditors arising directly from its operations.
The Company's specific risks in connection with financial instruments are set out below;
i) Liquidity risk and cashflow risk
The Company manages its cash and borrowing requirements to optimise interest income and minimise expense, whilst ensuring that the Company has sufficient liquid resources to meet the operating needs of its business.
ii) Interest rate risk
The Company is exposed to cash flow interest rate risk on floating rate deposits and bank overdrafts.
iii) Foreign currency risk
The Company is exposed to foreign currency risk and manages it by continual monitoring of the US dollar exchange rate.
iv) Credit risk
Investments of cash surpluses are made through banks and companies which must fulfil credit rating criteria approved by a director.
Receivable balances are monitored on an ongoing basis and provision is made for doubtful debts where necessary.
v) Price risk
Wherever possible we look to pass on any increases in costs. Where suppliers give any advance notice of increases, we often bulk buy to secure lower prices. 

Page 1

 
MASTEROAST COFFEE CO. LIMITED
 

STRATEGIC REPORT (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023

Financial key performance indicators
 
The directors consider the key performance indicators applicable to the Company to be production quantities, customer feedback and cash resources which are all measured on a regular basis. Furthermore they consider gross profit to be a financial key performance indicator which can be seen in the Statement of comprehensive income.

Future developments

Future developments are provided in the Chairman's statement within the Directors' report.


This report was approved by the board and signed on its behalf.



................................................
Mr L G Mills - Chairman
Director

Date: 4 October 2024
Page 2

 
MASTEROAST COFFEE CO. LIMITED
 
 
 
DIRECTORS' REPORT
FOR THE YEAR ENDED 31 DECEMBER 2023

The directors present their report and the financial statements for the year ended 31 December 2023.

Directors' responsibilities statement

The directors are responsible for preparing the Strategic Report, the Directors' 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 applicable law and United Kingdom Accounting Standards (United Kingdom Generally Accepted Accounting Practice), including Financial Reporting Standard 102 ‘The Financial Reporting Standard applicable in the UK and Republic of Ireland'. 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 for the Company's financial statements 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 to enable them to ensure that the financial statements comply with the Companies Act 2006They 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.

Page 3

 
MASTEROAST COFFEE CO. LIMITED
 
 
 
DIRECTORS' REPORT (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023

Chairman's statement

Examination of these figures reveals a satisfactory 7% growth in revenue during the year. This increase was achieved despite a 5% price reduction in May, which the company decided upon as a measure of support for our customers still facing sluggish trading conditions post Covid. All in all, these figures reflect real volume growth.
Gross profit remained as a percentage of turnover at 20%, after materials and direct labour costs, a reflection of our commitment to competitive customer pricing.
Operational profit was down by 34% at 6% of sales.
EBITDA improved by 44% to £2.4m.
Trading during 2023 was affected by ever-more volatility in the coffee market. Nonetheless, as a private label coffee roasting and packing business without a brand or direct sales, our success is dependant on that of our customers and as such we are always conscious of the need to help maintain customers’ competitiveness, hence the decision to implement a price reduction in May.
A stagnant economy does not make for easy trading conditions nor rising cost of living, particularly for service industries, therefore I feel that the increase in the company’s revenue and volumes, along with modest profit growth is to be applauded.
During the year Masteroast has successfully focussed on operational efficiencies and fine-tuning productivity. As the pressures on economies, not only of the UK but internationally, seem unlikely to diminish any time soon, we shall continue the drive for greater efficiencies for the benefit of Masteroast and customers.
Diverse investments continue to be made within the group, both in terms of trade and plant, including a mid-range capacity roaster from Neuhaus Neotec, ordered in 2023, to come on stream in 2024. The new roaster will provide even greater flexibility within small to medium batch ranges and furthers our goal of emission  control.
Our decision to add another roaster from Neuhaus Neotec to the exclusive stable of machines already in service from that company, is testament to our continuing confidence in the exceptional engineering, versatility and unrivalled roast quality that we and our customers demand. We see this as further investment and confidence in our company’s clean, energy efficient growth going forward.
During the year, the Masteroast made contributions to some eleven charities and good causes, preferring to spread our support in these challenging times. 
Finally, once again I cannot fail to mention the dedicated and unique Masteroast team. A diverse collection of people working together, supporting each other and the company with the joint goal of providing the best possible product and service. It is a privilege to be part of such a team.

Page 4

 
MASTEROAST COFFEE CO. LIMITED
 
 
 
DIRECTORS' REPORT (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023


Results and dividends

The profit for the year, after taxation, amounted to £1,646,526 (2022: £2,198,955).

Dividends paid in the year amounted to £190,640 (2022: £1,387,473) as seen in note 12 to these financial statements.

Directors

The directors who served during the year were:

Mr L G Mills - Chairman 
Mrs Y E V Mills 
Mr A G Fawkes 
Mr M C Mills 

Disclosure of information to auditors

Each of the persons who are directors at the time when this Directors' Report is approved has confirmed that:
 
so far as the director is aware, there is no relevant audit information of which the Company's auditors are unaware, and

the director has taken all the steps that ought to have been taken as a director in order to be aware of any relevant audit information and to establish that the Company's auditors are aware of that information.

so far as the director is aware, there is no relevant audit information of which the Company and the Group's auditors are unaware, and
the director has taken all the steps that ought to have been taken as a director in order to be aware of any relevant audit information and to establish that the Company and the Group's auditors are aware of that information.

Auditors

Under section 487(2) of the Companies Act 2006, MHA will be deemed to have been reappointed as auditors 28 days after these financial statements were sent to members or 28 days after the latest date prescribed for filing the accounts with the registrar, whichever is earlier.

Page 5

 
MASTEROAST COFFEE CO. LIMITED
 
 
 
DIRECTORS' REPORT (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023

This report was approved by the board and signed on its behalf.
 





................................................
Mrs Y E V Mills
Director

Date: 4 October 2024

Plantation House
Newark Road
Peterborough
PE1 5UA

Page 6

 
MASTEROAST COFFEE CO. LIMITED
 
 
 
INDEPENDENT AUDITORS' REPORT TO THE MEMBERS OF MASTEROAST COFFEE CO. LIMITED
 

Opinion


We have audited the financial statements of Masteroast Coffee Co. Limited (the 'Company') for the year ended 31 December 2023, which comprise the Statement of Comprehensive Income, the Balance Sheet, the Statement of Changes in Equity and the related notes, including a summary of significant accounting policiesThe 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:


give a true and fair view of the state of the Company's affairs as at 31 December 2023 and of its profit for the year then ended;
have been properly prepared in accordance with United Kingdom Generally Accepted Accounting Practice; and
have been prepared in accordance with the requirements of the Companies Act 2006.


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 Auditors' 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 United Kingdom, including the Financial Reporting Council'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.


Page 7

 
MASTEROAST COFFEE CO. LIMITED
 
 
 
INDEPENDENT AUDITORS' REPORT TO THE MEMBERS OF MASTEROAST COFFEE CO. LIMITED (CONTINUED)


Other information


The other information comprises the information included in the Annual Report other than the financial statements and our Auditors' Report thereon. The directors are responsible for the other information contained within the Annual ReportOur 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.


Opinion on other matters prescribed by the Companies Act 2006
 

In our opinion, based on the work undertaken in the course of the audit:


the information given in the Strategic Report and the Directors' Report for the financial year for which the financial statements are prepared is consistent with the financial statements; and
the Strategic Report and the Directors' Report have been prepared in accordance with applicable legal requirements.


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:


adequate accounting records have not been kept, or returns adequate for our audit have not been received from branches not visited by us; or
the financial statements are not in agreement with the accounting records and returns; or
certain disclosures of directors' remuneration specified by law are not made; or
we have not received all the information and explanations we require for our audit.


Responsibilities of directors
 

As explained more fully in the Directors' Responsibilities Statement set out on page 3, 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.


Page 8

 
MASTEROAST COFFEE CO. LIMITED
 
 
 
INDEPENDENT AUDITORS' REPORT TO THE MEMBERS OF MASTEROAST COFFEE CO. LIMITED (CONTINUED)


Auditors' 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 Auditors' 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 the extent to which our procedures are capable of detecting irregularities, including fraud is detailed below: 
•  Enquiry of management and those charged with governance around actual and potential litigation and    claims;  
•  Enquiry of staff to identify any instances of non-compliance with laws and regulations;  
• Performing audit work over the risk of management override of controls, including testing of journal    entries and other adjustments for appropriateness and reviewing accounting estimates for bias;  
• Reviewing financial statement disclosures and testing to supporting documentation to assess compliance   with applicable laws and regulations.



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 will be 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 Financial Reporting Council's website at: www.frc.org.uk/auditorsresponsibilities. This description forms part of our Auditors' Report.


Page 9

 
MASTEROAST COFFEE CO. LIMITED
 
 
 
INDEPENDENT AUDITORS' REPORT TO THE MEMBERS OF MASTEROAST COFFEE CO. LIMITED (CONTINUED)


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 2006Our 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 Auditors' 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.





Ian Jacobs BA FCA (Senior Statutory Auditor)
  
for and on behalf of MHA, Statutory Auditor
Peterborough, United Kingdom
 
MHA is the trading name of MacIntyre Hudson LLP, a limited liability partnership in England and Wales (registered number OC312313)
Date:
  

9 October 2024
Page 10

 
MASTEROAST COFFEE CO. LIMITED
 
 
STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEAR ENDED 31 DECEMBER 2023

2023
2022
Note
£
£

  

Turnover
 4 
30,050,483
28,036,963

Cost of sales
  
(24,124,604)
(22,485,285)

Gross profit
  
5,925,879
5,551,678

Distribution costs
  
(84,021)
(183,908)

Administrative expenses
  
(4,222,945)
(2,799,155)

Other operating income
 5 
188,300
170,135

Operating profit
 6 
1,807,213
2,738,750

Interest payable and similar expenses
 10 
(81,066)
(88,099)

Profit before tax
  
1,726,147
2,650,651

Tax on profit
 11 
(79,621)
(451,696)

Profit for the financial year
  
1,646,526
2,198,955

There were no recognised gains and losses for 2023 or 2022 other than those included in the statement of comprehensive income.

There was no other comprehensive income for 2023 (2022: £NIL).

The notes on pages 14 to 30 form part of these financial statements.

Page 11

 
MASTEROAST COFFEE CO. LIMITED
REGISTERED NUMBER: 01746071

BALANCE SHEET
AS AT 31 DECEMBER 2023

2023
2022
Note
£
£

Fixed assets
  

Tangible assets
 13 
3,325,616
3,421,891

Current assets
  

Stocks
 14 
4,654,646
5,456,258

Debtors: amounts falling due within one year
 15 
9,375,321
8,253,749

Cash at bank and in hand
 16 
259,990
293,897

  
14,289,957
14,003,904

Creditors: amounts falling due within one year
 17 
(6,367,229)
(7,495,435)

Net current assets
  
 
 
7,922,728
 
 
6,508,469

Total assets less current liabilities
  
11,248,344
9,930,360

Creditors: amounts falling due after more than one year
 18 
(7,484)
(130,737)

Provisions for liabilities
  

Deferred tax
 20 
(436,124)
(450,773)

Net assets
  
10,804,736
9,348,850


Capital and reserves
  

Called up share capital 
 21 
1,000
1,000

Profit and loss account
 22 
10,803,736
9,347,850

  
10,804,736
9,348,850


The financial statements were approved and authorised for issue by the board and were signed on its behalf by: 




................................................
Mr L G Mills - Chairman
................................................
Mrs Y E V Mills
Director
Director


Date: 4 October 2024
Date: 4 October 2024

The notes on pages 14 to 30 form part of these financial statements.

Page 12

 
MASTEROAST COFFEE CO. LIMITED
 

STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 DECEMBER 2023


Called up share capital
Profit and loss account
Total equity

£
£
£


At 1 January 2022
1,000
8,536,368
8,537,368


Comprehensive income for the year

Profit for the year
-
2,198,955
2,198,955

Dividends declared
-
(1,387,473)
(1,387,473)



At 1 January 2023
1,000
9,347,850
9,348,850


Comprehensive income for the year

Profit for the year
-
1,646,526
1,646,526

Dividends declared
-
(190,640)
(190,640)


At 31 December 2023
1,000
10,803,736
10,804,736


The notes on pages 14 to 30 form part of these financial statements.

Page 13

 
MASTEROAST COFFEE CO. LIMITED
 
 
 
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023

1.


General information

Masteroast Coffee Co. Limited ("the Company") is a private company limited by shares, incorporated in England and Wales under the Companies Act. 
The registered number and address of the registered office is given in the Company information. 
The nature of the Company's operations and its principal activities are set out in the Strategic report on page 1. 
The functional and presentational currency of the Company is pounds sterling (£) and rounded to the nearest whole pound. 

2.Accounting policies

 
2.1

Basis of preparation of financial statements

The financial statements have been prepared under the historical cost convention unless otherwise specified within these accounting policies and in accordance with Financial Reporting Standard 102, the Financial Reporting Standard applicable in the UK and the Republic of Ireland and the Companies Act 2006.

The preparation of financial statements in compliance with FRS 102 requires the use of certain critical accounting estimates. It also requires management to exercise judgement in applying the Company's accounting policies (see note 3).

The following principal accounting policies have been applied:

 
2.2

Financial Reporting Standard 102 - reduced disclosure exemptions

The Company has taken advantage of the following disclosure exemptions in preparing these financial statements, as permitted by the FRS 102 "The Financial Reporting Standard applicable in the UK and Republic of Ireland":
the requirements of Section 7 Statement of Cash Flows;
the requirements of Section 3 Financial Statement Presentation paragraph 3.17(d);
the requirements of Section 11 Financial Instruments paragraphs 11.42, 11.44 to 11.45, 11.47, 11.48(a)(iii), 11.48(a)(iv), 11.48(b) and 11.48(c);
the requirements of Section 12 Other Financial Instruments paragraphs 12.26 to 12.27, 12.29(a), 12.29(b) and 12.29A;
the requirements of Section 33 Related Party Disclosures paragraph 33.7.

This information is included in the consolidated financial statements of Masteroast Holdings Limited  as at 31 December 2023 and these financial statements may be obtained from Companies House.

Page 14

 
MASTEROAST COFFEE CO. LIMITED
 
 
 
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023

2.Accounting policies (continued)

 
2.3

Going concern

The financial statements have been prepared on a going concern basis. The Directors have considered relevant information, including the annual budget, forecast future cash flows and the impact of subsequent events in making their assessment. 
Based on these assessments and having regard to the resources available to the entity, the Directors have concluded that there is no material uncertainity and that they can continue to adopt the going concern basis in preparing the annual report and accounts. 

 
2.4

Revenue

Revenue is recognised to the extent that it is probable that the economic benefits will flow to the Company and the revenue can be reliably measured. Revenue is measured as the fair value of the consideration received or receivable, excluding discounts, rebates, value added tax and other sales taxes. The following criteria must also be met before revenue is recognised:

Sale of goods

Revenue from the sale of goods is recognised when all of the following conditions are satisfied:
the Company has transferred the significant risks and rewards of ownership to the buyer;
the Company retains neither continuing managerial involvement to the degree usually associated with ownership nor effective control over the goods sold;
the amount of revenue can be measured reliably;
it is probable that the Company will receive the consideration due under the transaction; and
the costs incurred or to be incurred in respect of the transaction can be measured reliably.

Rendering of services

Revenue from a contract to provide services is recognised in the period in which the services are provided in accordance with the stage of completion of the contract when all of the following conditions are satisfied:
the amount of revenue can be measured reliably;
it is probable that the Company will receive the consideration due under the contract;
the stage of completion of the contract at the end of the reporting period can be measured reliably; and
the costs incurred and the costs to complete the contract can be measured reliably.

Page 15

 
MASTEROAST COFFEE CO. LIMITED
 
 
 
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023

2.Accounting policies (continued)

 
2.5

Foreign currency translation

Functional and presentation currency

The Company's functional and presentational currency is GBP.

Transactions and balances

Foreign currency transactions are translated into the functional currency using the spot exchange rates at the dates of the transactions.

At each period end foreign currency monetary items are translated using the closing rate. Non-monetary items measured at historical cost are translated using the exchange rate at the date of the transaction and non-monetary items measured at fair value are measured using the exchange rate when fair value was determined.

Foreign exchange gains and losses resulting from the settlement of transactions and from the translation at period-end exchange rates of monetary assets and liabilities denominated in foreign currencies are recognised in profit or loss except when deferred in other comprehensive income as qualifying cash flow hedges.

 
2.6

Operating leases: the Company as lessor

Rental income from operating leases is credited to profit or loss on a straight-line basis over the lease term.

Amounts paid and payable as an incentive to sign an operating lease are recognised as a reduction to income over the lease term on a straight-line basis, unless another systematic basis is representative of the time pattern over which the lessor's benefit from the leased asset is diminished.

 
2.7

Operating leases: the Company as lessee

Rentals paid under operating leases are charged to profit or loss on a straight-line basis over the lease term.

 
2.8

Leased assets: the Company as lessee

Assets obtained under hire purchase contracts and finance leases are capitalised as tangible fixed assets. Assets acquired by finance lease are depreciated over the shorter of the lease term and their useful lives. Assets acquired by hire purchase are depreciated over their useful lives. Finance leases are those where substantially all of the benefits and risks of ownership are assumed by the company. Obligations under such agreements are included in creditors net of the finance charge allocated to future periods. The finance element of the rental payment is charged to profit or loss so as to produce a constant periodic rate of charge on the net obligation outstanding in each period.

 
2.9

Interest income

Interest income is recognised in profit or loss using the effective interest method.

Page 16

 
MASTEROAST COFFEE CO. LIMITED
 
 
 
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023

2.Accounting policies (continued)

 
2.10

Finance costs

Finance costs are charged to profit or loss over the term of the debt using the effective interest method so that the amount charged is at a constant rate on the carrying amount.

 
2.11

Borrowing costs

All borrowing costs are recognised in profit or loss in the year in which they are incurred.

  
2.12

Pensions

Defined contribution pension plan
The Company operates a defined contribution plan for its employees. A defined contribution plan is a pension plan under which the Company pays fixed contributions into a separate entity. Once the contributions have been paid the Company has no further payment obligations.
The contributions are recognised as an expense in profit or loss when they fall due. Amounts not paid are shown in other creditors as a liability in the Balance Sheet. The assets of the plan are held separately from the Company in independently administered funds.

 
2.13

Current and deferred taxation

The tax expense for the year comprises current and deferred tax. Tax is recognised in profit or loss except that a charge attributable to an item of income and expense recognised as other comprehensive income or to an item recognised directly in equity is also recognised in other comprehensive income or directly in equity respectively.

The current income tax charge is calculated on the basis of tax rates and laws that have been enacted or substantively enacted by the balance sheet date in the countries where the Company operates and generates income.

Deferred tax balances are recognised in respect of all timing differences that have originated but not reversed by the balance sheet date, except that:
The recognition of deferred tax assets is limited to the extent that it is probable that they will be recovered against the reversal of deferred tax liabilities or other future taxable profits; and
Any deferred tax balances are reversed if and when all conditions for retaining associated tax allowances have been met.

Deferred tax balances are not recognised in respect of permanent differences except in respect of business combinations, when deferred tax is recognised on the differences between the fair values of assets acquired and the future tax deductions available for them and the differences between the fair values of liabilities acquired and the amount that will be assessed for tax. Deferred tax is determined using tax rates and laws that have been enacted or substantively enacted by the balance sheet date.

Page 17

 
MASTEROAST COFFEE CO. LIMITED
 
 
 
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023

2.Accounting policies (continued)

 
2.14

Tangible fixed assets

Tangible fixed assets under the cost model are stated at historical cost less accumulated depreciation and any accumulated impairment losses. Historical cost includes expenditure that is directly attributable to bringing the asset to the location and condition necessary for it to be capable of operating in the manner intended by management.

At each reporting date the Company assesses whether there is any indication of impairment. If such indication exists, the recoverable amount of the asset is determined which is the higher of its fair value less costs to sell and its value in use. An impairment loss is recognised where the carrying amount exceeds the recoverable amount.

The Company adds to the carrying amount of an item of fixed assets the cost of replacing part of such an item when that cost is incurred, if the replacement part is expected to provide incremental future benefits to the Company. The carrying amount of the replaced part is derecognised. Repairs and maintenance are charged to profit or loss during the period in which they are incurred.

Depreciation is charged so as to allocate the cost of assets less their residual value over their estimated useful lives, using the straight line method and on a reducing balance basis.

Depreciation is provided on the following basis:

Leasehold improvements
-
5%
straight line method
Plant and machinery
-
15%
reducing balance basis
Motor vehicles
-
25%
reducing balance basis
Fixtures and fittings
-
15%
reducing balance basis

The assets' residual values, useful lives and depreciation methods are reviewed, and adjusted prospectively if appropriate, or if there is an indication of a significant change since the last reporting date.

Gains and losses on disposals are determined by comparing the proceeds with the carrying amount and are recognised in profit or loss.

 
2.15

Stocks

Stocks are stated at the lower of cost and net realisable value, being the estimated selling price less costs to complete and sell. Cost is based on the cost of purchase on a weighted average basis. 

At each balance sheet date, stocks are assessed for impairment. If stock is impaired, the carrying amount is reduced to its selling price less costs to complete and sell. The impairment loss is recognised immediately in profit or loss.

 
2.16

Debtors

Short-term debtors are measured at transaction price, less any impairment. Loans receivable are measured initially at fair value, net of transaction costs, and are measured subsequently at amortised cost using the effective interest method, less any impairment.

Page 18

 
MASTEROAST COFFEE CO. LIMITED
 
 
 
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023

2.Accounting policies (continued)

 
2.17

Cash and cash equivalents

Cash is represented by cash in hand and deposits with financial institutions repayable without penalty on notice of not more than 24 hours. Cash equivalents are highly liquid investments that mature in no more than three months from the date of acquisition and that are readily convertible to known amounts of cash with insignificant risk of change in value.

 
2.18

Creditors

Short-term creditors are measured at the transaction price. Other financial liabilities, including bank loans, are measured initially at fair value, net of transaction costs, and are measured subsequently at amortised cost using the effective interest method.

 
2.19

Financial instruments

The Company has elected to apply the provisions of Section 11 “Basic Financial Instruments” of FRS 102 to all of its financial instruments.

The Company has elected to apply the recognition and measurement provisions of IFRS 9 Financial Instruments (as adopted by the UK Endorsement Board) with the disclosure requirements of Sections 11 and 12 and the other presentation requirements of FRS 102.

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 trade and other receivables, cash and bank balances, are initially measured at their transaction price including transaction costs and are subsequently carried at their amortised cost using the effective interest method, less any provision for impairment, 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.

Discounting is omitted where the effect of discounting is immaterial. The Company's cash and cash equivalents, trade and most other receivables due with the operating cycle fall into this category of financial instruments.

Impairment of financial assets

Financial assets are assessed for indicators of impairment at each reporting date. 

Financial assets are impaired when events, subsequent to their initial recognition, indicate the estimated future cash flows derived from the financial asset(s) have been adversely impacted. The impairment loss will be the difference between the current carrying amount and the present value of the future cash flows at the asset(s) original effective interest rate.

 

Page 19

 
MASTEROAST COFFEE CO. LIMITED
 
 
 
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023

2.Accounting policies (continued)


2.19
Financial instruments (continued)

If there is a favourable change in relation to the events surrounding the impairment loss then the impairment can be reviewed for possible reversal. The reversal will not cause the current carrying amount to exceed the original carrying amount had the impairment not been recognised. The impairment reversal is recognised in the profit or loss.

Financial liabilities

Financial liabilities and equity instruments are classified according to the substance of the contractual arrangements entered into. An equity instruments any contract that evidences a residual interest in the assets of the Company after the deduction of all its liabilities.

Basic financial liabilities, which include trade and other payables, bank loans and other loans are initially measured at their transaction price after transaction costs. When this constitutes a financing transaction, whereby the debt instrument is measured at the present value of the future receipts discounted at a market rate of interest. Discounting is omitted where the effect of discounting is immaterial.

Debt instruments are subsequently carried at their amortised cost using the effective interest rate method.

Trade payables are obligations to pay for goods and services that have been acquired in the ordinary course of business from suppliers. Trade payables are classified as current liabilities if the payment is due within one year. If not, they represent non-current liabilities. Trade payables are initially recognised at their transaction price and subsequently are measured at amortised cost using the effective interest method. Discounting is omitted where the effect of discounting is immaterial.

Derecognition of financial instruments

Derecognition of financial assets

Financial assets are derecognised when their contractual right to future cash flow expire, or are settled, or when the Company transfers the asset and substantially all the risks and rewards of ownership to another party. If significant risks and rewards of ownership are retained after the transfer to another party, then the Company will continue to recognise the value of the portion of the risks and rewards retained.

Derecognition of financial liabilities

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

 
2.20

Dividends

Equity dividends are recognised when they become legally payable. Interim equity dividends are recognised when paid. Final equity dividends are recognised when approved by the shareholders at an annual general meeting.

Page 20

 
MASTEROAST COFFEE CO. LIMITED
 
 
 
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023

3.


Judgements in applying accounting policies and key sources of estimation uncertainty

The following are the critical estimations that the directors have made in the process of applying the Company's accounting policies and that have the most significant effect on the amounts recognised in the financial statements. 
Key source of estimation uncertainty - Determining residual values and useful economic lives of property, plant and equipment 
The Company depreciates tangible assets over their estimates useful lives. The estimation of the useful lives of assets is based on historic performance as well as expectations about future use and therefore requires estimates and assumptions to be applied by management. The actual lives of these assets can vary depending on a variety of factors, including technological innovation, product life cycles and maintenance programmes. 
Judgment is applied by management when determining the residual values for plant, machinery and equipment. When determining the residual value, management aim to assess the amount that the Company would currently obtain for the disposal of the asset, if it were already of the condition expected at the end of its useful economic life. Where possible this is done with reference to external market prices. 
Key source of estimation uncertainty - Recoverability of receivables 
The Company establishes a provision for receivables that are not estimated to be recoverable. When assessing recoverability, the directors consider factorssuch as the aging of the receivables, past experience of recoverability, and the credit profile of individual or groups of customers.   


4.


Turnover

An analysis of turnover by class of business is as follows; sale of goods £29,707,063 (2022: £27,824,890) and rendering of services £343,420 (2022: £212,073).

2023
2022
£
£

United Kingdom
28,722,830
26,989,434

Rest of Europe
1,327,653
1,047,529

30,050,483
28,036,963



5.


Other operating income

2023
2022
£
£

Rents receivable
188,300
170,135


Page 21

 
MASTEROAST COFFEE CO. LIMITED
 
 
 
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023

6.


Operating profit

The operating profit is stated after charging/(crediting):

2023
2022
£
£

Exchange differences
(66,911)
(79,307)

Other operating lease rentals
300,000
275,333

Profit on sale of tangible assets
(170)
(4,166)


7.


Auditors' remuneration

During the year, the Company obtained the following services from the Company's auditors:


2023
2022
£
£

Fees payable to the Company's auditors for the audit of the Company's financial statements
24,750
19,725

The Company has taken advantage of the exemption not to disclose amounts paid for non-audit services as these are disclosed in the consolidated accounts of the parent Company.


8.


Employees

Staff costs, including directors' remuneration, were as follows:


2023
2022
£
£

Wages and salaries
3,103,984
2,970,324

Social security costs
271,895
279,359

Cost of defined contribution scheme
107,463
107,329

3,483,342
3,357,012


The average monthly number of employees, including the directors, during the year was as follows:


        2023
        2022
            No.
            No.







Production staff
101
100



Sales and administrative staff
22
20



Management staff
13
10

136
130

Page 22

 
MASTEROAST COFFEE CO. LIMITED
 
 
 
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023

9.


Directors' remuneration

2023
2022
£
£

Directors' emoluments
-
4,438



10.


Interest payable and similar expenses

2023
2022
£
£


Bank interest payable
58,588
60,364

Finance leases and hire purchase contracts
22,478
27,735

81,066
88,099


11.


Taxation


2023
2022
£
£

Corporation tax


Current tax on profits for the year
94,270
475,000

Adjustments in respect of previous periods
-
6,562


94,270
481,562


Total current tax
94,270
481,562

Deferred tax


Origination and reversal of timing differences
(14,649)
(29,866)

Total deferred tax
(14,649)
(29,866)


Tax on profit
79,621
451,696
Page 23

 
MASTEROAST COFFEE CO. LIMITED
 
 
 
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
 
11.Taxation (continued)


Factors affecting tax charge for the year

The tax assessed for the year is lower than (2022 - lower than) the standard rate of corporation tax in the UK of 25% (2022 - 19%). The differences are explained below:

2023
2022
£
£


Profit on ordinary activities before tax
1,726,147
2,650,651


Profit on ordinary activities multiplied by standard rate of corporation tax in the UK of 25% (2022 - 19%)
431,537
503,624

Effects of:


Expenses not deductible for tax purposes
19,974
3,615

Capital allowances for year in excess of depreciation
27,004
33,366

Adjustments to tax charge in respect of prior periods
-
(6,562)

Origination and reversal of timing differences
(14,649)
(29,866)

Utilised tax losses
(152,349)
-

Change in tax rate leading to an decrease in the tax charge
(5,930)
-

Group relief
(225,923)
(51,689)

Profit on disposal of fixed assets
(43)
(792)

Total tax charge for the year
79,621
451,696


Factors that may affect future tax charges

In the Spring Budget 2021, the UK Government announced that from 1 April 2023 the corporation tax rate
would increase to 25% (rather than remaining at 19%, as previously enacted). This new law was
substantively enacted on 24 May 2021. For the financial year ended 31 December 2023, the current
weighted averaged tax rate was 23.5%.
Deferred taxes at the balance sheet date have been measured using these enacted tax rates and
reflected in these financial statements.


12.


Dividends

2023
2022
£
£


Dividends declared
190,640
1,387,473
Page 24

 
MASTEROAST COFFEE CO. LIMITED
 
 
 
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023

13.


Tangible fixed assets





Leasehold improvements
Plant and machinery
Motor vehicles
Fixtures and fittings
Total

£
£
£
£
£



Cost


At 1 January 2023
1,705,764
6,824,017
69,924
701,317
9,301,022


Additions
-
192,615
216,383
18,376
427,374


Disposals
-
(3,000)
-
-
(3,000)



At 31 December 2023

1,705,764
7,013,632
286,307
719,693
9,725,396



Depreciation


At 1 January 2023
973,919
4,374,228
29,731
501,253
5,879,131


Charge for the year on owned assets
81,321
230,686
25,557
31,385
368,949


Charge for the year on financed assets
-
154,670
-
-
154,670


Disposals
-
(2,970)
-
-
(2,970)



At 31 December 2023

1,055,240
4,756,614
55,288
532,638
6,399,780



Net book value



At 31 December 2023
650,524
2,257,018
231,019
187,055
3,325,616



At 31 December 2022
731,845
2,449,789
40,193
200,064
3,421,891

The net book value of assets held under finance leases or hire purchase contracts, included above, are as follows:


2023
2022
£
£



Plant and machinery
876,466
1,027,042

Page 25

 
MASTEROAST COFFEE CO. LIMITED
 
 
 
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023

14.


Stocks

2023
2022
£
£

Raw materials and consumables
4,512,351
5,389,935

Finished goods and goods for resale
142,295
66,323

4,654,646
5,456,258



15.


Debtors

2023
2022
£
£


Trade debtors
4,764,923
4,538,381

Amounts owed by group undertakings
4,135,264
3,527,687

Other debtors
110,955
107,256

Prepayments and accrued income
364,179
80,425

9,375,321
8,253,749


Amounts owed by group undertakings are unsecured, interest free, have no fixed date of repayment and are repayable on demand.


16.


Cash and cash equivalents

2023
2022
£
£

Cash at bank and in hand
259,990
293,897

Less: bank overdrafts
(1,110,204)
(1,431,327)

(850,214)
(1,137,430)


Page 26

 
MASTEROAST COFFEE CO. LIMITED
 
 
 
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023

17.


Creditors: Amounts falling due within one year

2023
2022
£
£

Bank overdrafts
1,110,204
1,431,327

Trade creditors
4,476,642
4,813,550

Amounts owed to group undertakings
197,755
-

Corporation tax
-
475,000

Other taxation and social security
65,009
54,348

Obligations under finance lease and hire purchase contracts
110,593
242,516

Other creditors
25,250
25,250

Accruals and deferred income
381,776
453,444

6,367,229
7,495,435


Bank overdrafts are secured by a debenture over Company assets and an intercompany guarantee. 
Obligations under finance leases and hire purchase amounting to £110,593 (2022: £242,516) are secured against the assets to which they relate. 
Amounts owed to group undertakings are unsecured, interest free, have no fixed date of repayment and are repayable on demand.


18.


Creditors: Amounts falling due after more than one year

2023
2022
£
£

Obligations under finance leases and hire purchase contracts
7,484
130,737


Obligations under finance leases and hire purchase amounting to £7,484 (2022: £130,737) are secured by the group against the assets to which they relate. 


19.


Hire purchase and finance leases


Minimum lease payments under hire purchase and finance leases fall due as follows:

2023
2022
£
£


Within 1 year
110,593
242,516

Between 1-5 years
7,484
130,737

118,077
373,253
Page 27

 
MASTEROAST COFFEE CO. LIMITED
 
 
 
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023

20.


Deferred taxation




2023
2022


£

£






At beginning of year
450,773
480,639


Charged to profit or loss
(14,649)
(29,866)



At end of year
436,124
450,773

The provision for deferred taxation is made up as follows:

2023
2022
£
£


Accelerated capital allowances
436,124
450,773


21.


Share capital

2023
2022
£
£
Allotted, called up and fully paid



1,000 (2022 - 1,000) Ordinary shares of £1.00 each
1,000
1,000



22.


Reserves

Profit and loss account

The profit and loss account represents cumulative profits or losses, net of dividends paid and other adjustments.


23.


Capital commitments


At 31 December 2023 the Company had capital commitments as follows:

2023
2022
£
£


Plant and machinery
386,644
-

386,644
-

Page 28

 
MASTEROAST COFFEE CO. LIMITED
 
 
 
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023

24.


Pension commitments

The Company operates a defined contributions pension scheme. The assets of the scheme are held separately of those of the Company in an independently administered fund. The pension cost charge represents contributions payable by the Company to the fund and amounted to £107,463 (2022: £107,329).


25.


Commitments under operating leases

At 31 December 2023 the Company had future minimum lease payments due under non-cancellable operating leases for each of the following periods:

2023
2022
£
£

Property leases


Not later than 1 year
300,000
300,000

Later than 1 year and not later than 5 years
1,200,000
1,200,000

Later than 5 years
1,200,000
1,500,000

2,700,000
3,000,000

2023
2022

£
£

Other operating leases


Not later than 1 year
19,914
5,059

Later than 1 year and not later than 5 years
23,275
7,167

43,189
12,226

Page 29

 
MASTEROAST COFFEE CO. LIMITED
 
 
 
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023

26.


Related party transactions

As the Company is a wholly subsidiary of Masteroast Holdings Limited, the Company has taken advantage of the exemption contained in FRS 102 section 33.1A Related Party Disclosures, and has therefore not disclosed transactions or balances with wholly owned entities which form part of its Group.
The consolidated financial statements of Masteroast Holdings Limited, within which this Company is included, are publicly available from Companies House. 
 
During the year the Company sold good totalling £447,276 (2022: £414,215) and purchased goods totalling £11,371 (2022: £11,106) from MCEU Limited, a non-wholly owned subsidiary of Masteroast Holdings Limited. At the Balance sheet date the Company was owed £175,074 (2022: £99,777) from MCEU Limited which is included within amounts owed by group undertakings and owed MCEU £Nil (2022: £2,191) which is included within trade creditors.
During the year sales totalling £23,713 (2022: £12,953) and purchases totalling £89,755 (2022: £Nil) were made to Plantation Management LLP, of  which directors Mr L G Mills, Mrs Y E V Mills and Mr A G Fawkes are sole members. At the balance sheet date the Company was owed £Nil (2022: £42,801) from Plantation Management LLP, £Nil  (2022: £38,241) of this balance is included within other debtors and £Nil (2022: £4,560) is included within trade debtors. The Company owed £Nil (2022: £10,689) to Plantation Management LLP and this balance is included within trade creditors. Furthermore, the company owed £Nil (2022: £15,000) to Plantation Management LLP which is included within accruals and deferred income.


27.


Ultimate parent company

The Company's immediate and ultimate parent company is Masteroast Holdings Limited, a company which is incorporated in England and Wales and holds all of the issued ordinary shares in this company. 
The registered address of Masteroast Holdings Limited is Plantation House, Newark Road, Peterborough, United Kingdom, PE1 5UA.
The Company is under the ultimate control of Mr L G Mills, the majority shareholder of Masteroast
Holdings Limited.
 
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