Company registration number 07738348 (England and Wales)
THE CAKE CREW LIMITED
ANNUAL REPORT AND FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JANUARY 2024
THE CAKE CREW LIMITED
COMPANY INFORMATION
Directors
P A Scholes
J D Hiley
R C McCarthy
R T E Capper
P Kitchen
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 2024
- 1 -
The directors present the strategic report for the year ended 30 January 2024.
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 2024, The Cake Crew delivered a turnaround following an exceptionally challenging year to January 2023.
Turnover has increased by £2.3m / 9% and there has been a strong focus on driving a recovery in profitability through improved efficiency and productivity, supported by an expanded management team and significant investment from the Company’s shareholders. The business has also seen key commodity prices stabilise, providing a platform on which to rebuild profitability.
The Cake Crew has worked closely with its customers and suppliers to ensure an ongoing focus on quality and new product development, leading to many new lines launched in the year and the development of further new product lines for the coming year.
The business has delivered an EBITDA for the year to January 2024 of £645k, reflecting a turnaround in profitability of over £1.6m compared to the prior year (2023: EBITDA loss of £1.0m). The EBITDA to January 2024 also reflected non-recurring turnaround costs and would have been higher without these.
Further growth is being delivered in the current year to January 2025 and the directors expect to deliver significant improvement in profitability compared to the year ended January 2024.
Funding
The shareholders have continued to support the company during its recovery and expansion through the provision of business loans either directly or via an associated company. External third party term loans have been significantly paid down allowing stronger cash generation from operating activities in the coming year.
Shareholder funding totalled £3.5m at January 2024, including rolled-up interest, with subsequent funding also provided to manage the seasonal working capital cycle. Shareholder loans shown on the balance sheet more than offset the balance sheet deficit and would restore the net asset value to c.£700k if treated 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:
Input price volatility – Risks impacting margin through movements in commodity and input prices. This risk has been mitigated by expanding the management team to include a buying specialist and locking in to contracted prices, where advantageous, to reduce the risk of volatility.
Production quality – Ensuring that appropriate standards, processes and procedures are in place to drive consistent high quality products and continued high rating in BRC and customer audits is a priority for management. External consultants have been engaged to improve and consolidate best practice and the operational management, technical and QA resources have been expanded.
Financial – the business is experiencing growth after a challenging period through Covid. Ensuring sufficient working capital to drive the growth is in place is a key factor for management. The shareholders have mitigated this risk by providing material levels of loan funding to the business to allow recovery and growth to be delivered, as well as funding improved infrastructure within which growth can be delivered.
THE CAKE CREW LIMITED
STRATEGIC REPORT (CONTINUED)
FOR THE YEAR ENDED 30 JANUARY 2024
- 2 -
Other performance indicators
The business increased its turnover by 9% (£2.3m) in the year to January 2024, building on the 17.5% growth achieved in the prior year.
Gross profit margin has recovered in the year to January 2024 as operational efficiency and productivity has been targeted by the management team.
The business is an A* BRC rated manufacturer with “Green” (or equivalent) ratings with its major supermarket retail customers.
R C McCarthy
Director
29 October 2024
THE CAKE CREW LIMITED
DIRECTORS' REPORT
FOR THE YEAR ENDED 30 JANUARY 2024
- 3 -
The directors present their annual report and financial statements for the year ended 30 January 2024.
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:
P A Scholes
J D Hiley
R C McCarthy
R T E Capper
P Kitchen
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 2024
- 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
29 October 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 2024 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:
give a true and fair view of the state of the company's affairs as at 30 January 2024 and of its loss 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.
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.
The other information comprises the information included in the annual report other than the financial statements and our auditor's report thereon. The directors are responsible for the other information contained within the annual report. Our opinion on the financial statements does not cover the other information and, except to the extent otherwise explicitly stated in our report, we do not express any form of assurance conclusion thereon. Our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the course of the audit, or otherwise appears to be materially misstated. If we identify such material inconsistencies or apparent material misstatements, we are required to determine whether this gives rise to a material misstatement in the financial statements themselves. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact.
We have nothing to report in this regard.
Opinions on other matters prescribed by the Companies Act 2006
In our opinion, based on the work undertaken in the course of our audit:
the information given in the strategic report and the directors' report for the financial year for which the financial statements are prepared is consistent with the financial statements; and
the strategic report and the directors' report have been prepared in accordance with applicable legal requirements.
THE CAKE CREW LIMITED
INDEPENDENT AUDITOR'S REPORT
TO THE MEMBERS OF THE CAKE CREW LIMITED (CONTINUED)
- 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:
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 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, 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.
Irregularities, including fraud, are instances of non-compliance with laws and regulations. We design procedures in line with our responsibilities, outlined above, to detect material misstatements in respect of irregularities, including fraud. The specific procedures for this engagement and the extent to which these are capable of detecting irregularities, including fraud, are detailed below:
At the planning stage of the audit we gain an understanding of the laws and regulations which apply to the company and how management seek to comply with them. This helps us to make appropriate risk assessments.
During the audit we focus on relevant risk areas and review compliance with laws and regulations through making relevant enquiries and corroboration by, for example, reviewing Board Minutes and other documentation.
We assess the risk of material misstatement in the financial statements including as a result of fraud and undertake procedures including:
Review of controls set in place by management
Enquiry of management as to whether they consider fraud or other irregularities may have occurred or where such opportunity might exist
Challenge of management assumptions with regard to accounting estimates
Identification and testing of journal entries, particularly those which may appear to be unusual by size or nature.
Because of the inherent limitations of an audit, there is a risk that we will not detect all irregularities, including those leading to a material misstatement in the financial statements, or non-compliance with regulation. This risk increases the more that compliance with a law or regulation is removed from the events and transactions reflected in the financial statements, as we are less likely to become aware of instances of non-compliance. The risk is also greater regarding irregularities occurring due to fraud rather than error, as fraud involves intentional concealment, forgery, collusion, omission or misrepresentation.
THE CAKE CREW LIMITED
INDEPENDENT AUDITOR'S REPORT
TO THE MEMBERS OF THE CAKE CREW LIMITED (CONTINUED)
- 7 -
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.
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
29 October 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 2024
- 8 -
2024
2023
Notes
£
£
Turnover
3
27,835,688
25,534,327
Cost of sales
(24,675,186)
(24,294,419)
Gross profit
3,160,502
1,239,908
Administrative expenses
(3,071,668)
(2,760,403)
Other operating income
10,050
10,080
Operating profit/(loss)
4
98,884
(1,510,415)
EBITDA
645,070
(1,000,889)
Amortisation of intangible fixed assets
(78,639)
(70,767)
Depreciation of tangible fixed assets
(467,546)
(438,759)
98,885
(1,510,415)
Interest receivable and similar income
2,907
5,890
Interest payable and similar expenses
7
(776,108)
(567,792)
Loss before taxation
(674,316)
(2,072,317)
Tax on loss
8
165,782
25,365
Loss for the financial year
(508,535)
(2,046,952)
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 2024
30 January 2024
- 9 -
2024
2023
Notes
£
£
£
£
Fixed assets
Intangible assets
9
398,801
172,020
Tangible assets
10
2,233,582
2,488,198
2,632,383
2,660,218
Current assets
Stocks
11
1,689,761
1,474,128
Debtors
12
5,317,346
4,621,384
Cash at bank and in hand
13,793
31,187
7,020,900
6,126,699
Creditors: amounts falling due within one year
13
(9,517,661)
(8,216,212)
Net current liabilities
(2,496,761)
(2,089,513)
Total assets less current liabilities
135,622
570,705
Creditors: amounts falling due after more than one year
14
(2,532,289)
(2,293,056)
Provisions for liabilities
(306,192)
(471,973)
Net liabilities
(2,702,859)
(2,194,324)
Capital and reserves
Called up share capital
18
148
148
Share premium account
59,852
59,852
Other reserves
19
5,000
5,000
Profit and loss reserves
(2,767,859)
(2,259,324)
Total equity
(2,702,859)
(2,194,324)
The financial statements were approved by the board of directors and authorised for issue on 29 October 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 2024
- 10 -
Share capital
Share premium account
Profit and loss reserves
Total
£
£
£
£
£
Balance at 31 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)
Year ended 30 January 2024:
Loss and total comprehensive income
-
-
-
(508,535)
(508,535)
Balance at 30 January 2024
148
59,852
5,000
(2,767,859)
(2,702,859)
THE CAKE CREW LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JANUARY 2024
- 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 company 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 funding to help with seasonal trading peaks in Q4 2024.
The forecasts reflect further profit improvement for the business and paying down almost all of the external term debts by June 2025.
At the time of approving the financial statements, the directors have a reasonable expectation that the company has 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.
1.5
Intangible fixed assets - goodwill
Acquired goodwill is written off in equal instalments over its estimated useful economic life of 10 years.
THE CAKE CREW LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 30 JANUARY 2024
1
Accounting policies
(Continued)
- 12 -
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
20% 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.
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.
THE CAKE CREW LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 30 JANUARY 2024
1
Accounting policies
(Continued)
- 13 -
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.
Other financial assets
Other financial assets, including investments in equity instruments which are not subsidiaries, associates or joint ventures, are initially measured at fair value, which is normally the transaction price. Such assets are subsequently carried at fair value and the changes in fair value are recognised in profit or loss, except that investments in equity instruments that are not publicly traded and whose fair values cannot be measured reliably are measured at cost less impairment.
Impairment of financial assets
Financial assets, other than those held at fair value through profit and loss, are assessed for indicators of impairment at each reporting end date.
Financial assets are impaired where there is objective evidence that, as a result of one or more events that occurred after the initial recognition of the financial asset, the estimated future cash flows have been affected. If an asset is impaired, the impairment loss is the difference between the carrying amount and the present value of the estimated cash flows discounted at the asset’s original effective interest rate. The impairment loss is recognised in profit or loss.
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 2024
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.
Other financial liabilities
Derivatives, including interest rate swaps and forward foreign exchange contracts, are not basic financial instruments. Derivatives are initially recognised at fair value on the date a derivative contract is entered into and are subsequently re-measured at their fair value. Changes in the fair value of derivatives are recognised in profit or loss in finance costs or finance income as appropriate, unless hedge accounting is applied and the hedge is a cash flow hedge.
Debt instruments that do not meet the conditions in FRS 102 paragraph 11.9 are subsequently measured at fair value through profit or loss. Debt instruments may be designated as being measured at fair value through profit or loss to eliminate or reduce an accounting mismatch or if the instruments are measured and their performance evaluated on a fair value basis in accordance with a documented risk management or investment strategy.
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 CAKE CREW LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 30 JANUARY 2024
1
Accounting policies
(Continued)
- 15 -
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.
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 2024. 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.
THE CAKE CREW LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 30 JANUARY 2024
- 16 -
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.
3
Turnover
All turnover relates to the manufacture of cake and related products sold into the UK grocery market.
4
Operating profit/(loss)
2024
2023
Operating profit/(loss) for the year is stated after charging/(crediting):
£
£
Government grants
(10,050)
(10,080)
Fees payable to the company's auditor for the audit of the company's financial statements
29,572
15,465
Depreciation of owned tangible fixed assets
436,457
400,077
Depreciation of tangible fixed assets held under finance leases
31,089
38,682
Loss on disposal of tangible fixed assets
6,284
-
Amortisation of intangible assets
78,639
70,767
Operating lease charges
222,164
191,549
THE CAKE CREW LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 30 JANUARY 2024
- 17 -
5
Employees
The average monthly number of persons (including directors) employed during the year was:
2024
2023
Number
Number
Production
235
262
Administration
18
17
Management
3
2
256
281
Their aggregate remuneration comprised:
£
£
Wages and salaries
7,226,473
7,364,257
Social security costs
674,674
698,494
Pension costs
114,336
150,190
8,015,483
8,212,941
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.
6
Directors' remuneration
2024
2023
£
£
Remuneration for qualifying services
309,695
325,086
Company pension contributions to defined contribution schemes
19,738
19,159
329,433
344,245
The number of directors for whom retirement benefits are accruing under defined contribution schemes amounted to 2 (2023 - 4).
Remuneration disclosed above include the following amounts paid to the highest paid director:
2024
2023
£
£
Remuneration for qualifying services
114,000
129,281
Company pension contributions to defined contribution schemes
17,320
763
Directors' remuneration include an amount of £38,400 (2023: £96,000) paid to a company of which a director of the company was also a director and 100% shareholder for consultancy services.
THE CAKE CREW LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 30 JANUARY 2024
- 18 -
7
Interest payable and similar expenses
2024
2023
£
£
Interest on bank overdrafts and loans
-
1,940
Interest on invoice finance arrangements
403,416
253,108
Interest on other financial liabilities
360,978
283,060
Interest on finance leases and hire purchase contracts
11,714
26,498
Other interest
3,186
776,108
567,792
8
Taxation
2024
2023
£
£
Deferred tax
Origination and reversal of timing differences
(165,782)
(25,318)
Adjustment in respect of prior periods
(47)
Total deferred tax
(165,782)
(25,365)
The actual credit 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:
2024
2023
£
£
Loss before taxation
(674,317)
(2,072,317)
Expected tax credit based on the standard rate of corporation tax in the UK of 25.00% (2023: 19.00%)
(168,579)
(393,740)
Tax effect of expenses that are not deductible in determining taxable profit
3,255
20,647
Tax effect of utilisation of tax losses not previously recognised
(116,530)
Unutilised tax losses carried forward
96,657
344,209
Adjustments in respect of prior years
47
Group relief
3,523
Depreciation on assets not qualifying for tax allowances
12,860
9,774
Capital allowance super deduction
(13,446)
Other
6,555
3,621
Taxation credit for the year
(165,782)
(25,365)
The company has tax losses to carry forward for offset against future profits of some £2.3m (2023: £1.9m). A deferred tax asset has been recognised in respect of carry forward losses of some £0.5m which are expected to be utilised within the next 12 months; no asset has been recognised in respect of the balance 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 2024
- 19 -
9
Intangible fixed assets
Goodwill
Development costs
Total
£
£
£
Cost
At 31 January 2023
105,030
564,422
669,452
Additions
305,420
305,420
At 30 January 2024
105,030
869,842
974,872
Amortisation and impairment
At 31 January 2023
105,030
392,402
497,432
Amortisation charged for the year
78,639
78,639
At 30 January 2024
105,030
471,041
576,071
Carrying amount
At 30 January 2024
398,801
398,801
At 30 January 2023
172,020
172,020
10
Tangible fixed assets
Leasehold improvements
Plant and machinery
Fixtures, fittings & equipment
Total
£
£
£
£
Cost
At 31 January 2023
645,869
3,907,548
230,326
4,783,743
Additions
79,747
130,044
15,423
225,214
Disposals
(3,886)
(13,970)
(17,856)
At 30 January 2024
721,730
4,023,622
245,749
4,991,101
Depreciation and impairment
At 31 January 2023
265,869
1,908,571
121,105
2,295,545
Depreciation charged in the year
65,447
369,086
33,013
467,546
Eliminated in respect of disposals
(1,198)
(4,374)
(5,572)
At 30 January 2024
330,118
2,273,283
154,118
2,757,519
Carrying amount
At 30 January 2024
391,612
1,750,339
91,631
2,233,582
At 30 January 2023
380,000
1,998,977
109,221
2,488,198
The net carrying value of tangible fixed assets includes the following in respect of assets held under finance leases or hire purchase contracts.
2024
2023
£
£
Plant and machinery
145,446
487,274
THE CAKE CREW LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 30 JANUARY 2024
- 20 -
11
Stocks
2024
2023
£
£
Raw materials and consumables
1,244,967
1,157,136
Finished goods and goods for resale
444,794
316,992
1,689,761
1,474,128
12
Debtors
2024
2023
Amounts falling due within one year:
£
£
Trade debtors
4,646,671
3,790,079
Amounts owed by group undertakings
62,627
Other debtors
315,823
235,190
Prepayments and accrued income
354,852
533,488
5,317,346
4,621,384
13
Creditors: amounts falling due within one year
2024
2023
Notes
£
£
Invoice discounting facility
15
3,815,036
3,271,643
Loans
15
564,853
742,450
Obligations under finance leases
16
59,809
148,001
Trade creditors
2,891,789
3,042,766
Amounts due to group undertakings
1,152,658
Other taxation and social security
439,577
439,078
Government grants
7,590
Other creditors
102,277
133,400
Accruals and deferred income
484,072
438,874
9,517,661
8,216,212
14
Creditors: amounts falling due after more than one year
2024
2023
Notes
£
£
Loans
15
218,921
587,288
Obligations under finance leases
16
33,456
90,128
Other loans
22, 23
2,279,912
1,598,000
Government grants
17,640
2,532,289
2,293,056
THE CAKE CREW LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 30 JANUARY 2024
- 21 -
15
Loans and overdrafts
2024
2023
£
£
Invoice discounting facility
3,815,036
3,271,643
Loans
783,774
1,329,738
Other loans (see notes 22 and 23)
2,279,912
1,598,000
6,878,722
6,199,381
Payable within one year
4,379,889
4,014,093
Payable after one year
2,498,833
2,185,288
The invoice discounting facility and a loan of £386,744 (2023: £483,428) 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 £181,943 (2023: £215,554) 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 £Nil (2023: £117,096) which is secured by guarantees from the Department of Business and Industry dated 4 July 2018 and partial guarantee by the PA Scholes (see note 22), other term loans which are secured by guarantee from Schocroft Cove Limited amounting to £425,108 (2023: £425,108) and a further loan of £Nil (2023: £88,552) guaranteed by Schocroft Cove Limited, GJ Bancroft and PA Scholes. Other loans comprise shareholder loans.
16
Finance lease obligations
2024
2023
Future minimum lease payments due under finance leases:
£
£
Within one year
62,766
167,901
In two to five years
35,471
85,472
98,237
253,373
Less: future finance charges
(4,972)
(15,244)
93,265
238,129
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 2024
- 22 -
17
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
2024
2023
Balances:
£
£
Accelerated capital allowances
425,129
476,784
Tax losses
(116,530)
-
Short term timing differences
(2,407)
(4,811)
306,192
471,973
2024
Movements in the year:
£
Liability at 31 January 2023
471,973
Credit to profit or loss
(165,781)
Liability at 30 January 2024
306,192
18
Share capital
2024
2023
£
£
Ordinary share capital
Issued and fully paid
14,810 Ordinary shares of 1p each
148
148
19
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.
20
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:
2024
2023
£
£
Within one year
131,870
47,906
Between two and five years
395,573
43,419
In over five years
281,667
809,110
91,325
THE CAKE CREW LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 30 JANUARY 2024
- 23 -
21
Controlling party
The Cake Crew Limited is a wholly owned subsidiary of Schocroft Cove Limited, a company registered in England & Wales.
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.
RTE Capper is also a director of WRC Recycling Limited, a company incorporated and registered in Scotland. As at 30 January 2024, the company owed WRC Recycling Limited £1,504,000 (2023: £1,004,000). The loans are unsecured and bear interest at 10%. Creditors due more than one year includes accrued interest of £114,864 (2023: £8,224).
The loans and interest were initially scheduled for repayment in monthly instalments from February 2025 with a final repayment date of 31 January 2029. The terms of the loan agreements have subsequently been varied to defer monthly instalments beyond February 2025.
Rental charges include £78,925 (2023: £57,500) paid to The Cake Crew Group SIPP. PA Scholes is a member of this scheme. Included in trade creditors is an amount of £nil (2023: £7,444) due to the scheme.
Rental charges also include £23,380 (2023: £nil) payable to Leeburn Limited and £36,025 (2023: £nil) payable to WRC Recycling Limited in which RTE Capper is also a director. Included in trade creditors are amounts owed to Leeburn Limited of £28,056 (2023: £nil) and WRC Recycling Limited of £2,879 (2023: £nil).
PA Scholes has provided a personal guarantee of £165,000 (2023: £165,000) in respect of the invoice discounting creditor, £175,000 (2023: £175,000) in respect of Finance Wales loans, £nil (2023: £117,096) in respect of the Barclays Bank loan and £Nil (2023: £88,552) in respect of other loans.
THE CAKE CREW LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 30 JANUARY 2024
- 24 -
23
Directors' transactions
Under the terms of a facility agreement dated 22 December 2022, RC McCarthy has loan capital of £594,000 due from the company as at 30 January 2024 (2023: £594,000). The loans are unsecured and bear interest at 10%. Creditors due more than one year includes accrued interest of £67,197 (2023: £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 defer monthly instalments beyond February 2025.
At the year end there were also loans outstanding from directors totalling £107,561 (2023: £90,375). Interest of £3,081 (2023: £5,890) has been charged at 3% on the outstanding amounts.
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