Registered number:
FOR THE YEAR ENDED 31 DECEMBER 2023
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MASTEROAST COFFEE CO. LIMITED
COMPANY INFORMATION
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MASTEROAST COFFEE CO. LIMITED
CONTENTS
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MASTEROAST COFFEE CO. LIMITED
STRATEGIC REPORT
FOR THE YEAR ENDED 31 DECEMBER 2023
The directors present their strategic report for the year ended 31 December 2023.
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.
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.
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MASTEROAST COFFEE CO. LIMITED
STRATEGIC REPORT (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
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 are provided in the Chairman's statement within the Directors' report.
This report was approved by the board and signed on its behalf.
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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.
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 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.
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MASTEROAST COFFEE CO. LIMITED
DIRECTORS' REPORT (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
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.
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MASTEROAST COFFEE CO. LIMITED
DIRECTORS' REPORT (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
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.
The directors who served during the year were:
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.
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.
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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.
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MASTEROAST COFFEE CO. LIMITED
INDEPENDENT AUDITORS' REPORT TO THE MEMBERS OF MASTEROAST COFFEE CO. LIMITED
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 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).
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.
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.
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MASTEROAST COFFEE CO. LIMITED
INDEPENDENT AUDITORS' REPORT TO THE MEMBERS OF MASTEROAST COFFEE CO. LIMITED (CONTINUED)
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 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.
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.
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.
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MASTEROAST COFFEE CO. LIMITED
INDEPENDENT AUDITORS' REPORT TO THE MEMBERS OF MASTEROAST COFFEE CO. LIMITED (CONTINUED)
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.
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MASTEROAST COFFEE CO. LIMITED
INDEPENDENT AUDITORS' REPORT TO THE MEMBERS OF MASTEROAST COFFEE CO. LIMITED (CONTINUED)
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 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.
Peterborough, United Kingdom
MHA is the trading name of MacIntyre Hudson LLP, a limited liability partnership in England and Wales (registered number OC312313)
Date:
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MASTEROAST COFFEE CO. LIMITED
STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEAR ENDED 31 DECEMBER 2023
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MASTEROAST COFFEE CO. LIMITED
REGISTERED NUMBER: 01746071
BALANCE SHEET
AS AT 31 DECEMBER 2023
The financial statements were approved and authorised for issue by the board and were signed on its behalf by:
The notes on pages 14 to 30 form part of these financial statements.
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MASTEROAST COFFEE CO. LIMITED
STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 DECEMBER 2023
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MASTEROAST COFFEE CO. LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
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
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:
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.
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MASTEROAST COFFEE CO. LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
2.Accounting policies (continued)
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.
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MASTEROAST COFFEE CO. LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
2.Accounting policies (continued)
Functional and presentation currency
Transactions and balances
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MASTEROAST COFFEE CO. LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
2.Accounting policies (continued)
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.
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MASTEROAST COFFEE CO. LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
2.Accounting policies (continued)
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:
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.
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MASTEROAST COFFEE CO. LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
2.Accounting policies (continued)
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.
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MASTEROAST COFFEE CO. LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
2.Accounting policies (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.
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MASTEROAST COFFEE CO. LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
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.
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).
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MASTEROAST COFFEE CO. LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
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MASTEROAST COFFEE CO. LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
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MASTEROAST COFFEE CO. LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
11.Taxation (continued)
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.
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MASTEROAST COFFEE CO. LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
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MASTEROAST COFFEE CO. LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
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MASTEROAST COFFEE CO. LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
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MASTEROAST COFFEE CO. LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
Profit and loss account
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MASTEROAST COFFEE CO. LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
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).
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MASTEROAST COFFEE CO. LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
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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