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Registered number: 05927519
LOLA'S CUPCAKES LIMITED
ANNUAL REPORT AND FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2024
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LOLA'S CUPCAKES LIMITED
COMPANY INFORMATION
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Hillsdown House 1st Floor
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Chartered Accountants & Statutory Auditor
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LOLA'S CUPCAKES LIMITED
CONTENTS
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Independent Auditors' Report
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Statement of Income and Retained Earnings
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Statement of Financial Position
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Notes to the Financial Statements
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LOLA'S CUPCAKES LIMITED
STRATEGIC REPORT
FOR THE YEAR ENDED 31 DECEMBER 2024
Lola's Cupcakes Limited is a manufacturer of high-quality fresh cakes, cupcakes, brownies and cheesecakes which are sold through our UK stores or through our successful and growing on line sales platform.
Business model
The business has achieved strong historic sales growth through its reputation of providing high-quality, innovative fresh product, and has continued to expand its offering by investing behind and developing a strong online platform and distribution network.
The Company’s continued growth reflects its reputation for providing premium quality celebration cakes and cupcakes through its high-profile stores and its strong online platform. The business has also seen growth in its “mailed” business, principally brownies and following on from the introduction of mailed cupcakes we are now seeing further success with mailed cakes.
Going concern
As reported in the Business Review (below) both our retail and online businesses remain profitable and cash generative.
The businesses retail outlets have returned to pre-Covid levels, and our online business has continued to grow on the successful base that was established during Covid. Our current forecasts show we continue to make positive returns and be cash generative.
Based on these forecasts and together with the support of its holding company the directors have a reasonable expectation that the Company will have adequate resources to meet its financial obligations as they fall due for the foreseeable future, and hence they continue to adopt the going concern basis of accounting in preparing the financial statements.
Following a successful 2023 as the Company returned to normal after Covid lockdowns and an uncertain business environment, the Company has had a successful 2024 as well, with sales growing by 5.22% to £26,168,834. And with careful control of input costs, gross profit increased to 62.3%, from 61.3%, and despite labour cost increases the Company almost tripled pre-tax profits to £2,107,932 and EBITDA increased by 46.6% to £2,738,474, representing 10.46% of sales.
The directors of the Company consider the performance and current growth of the business to be successful, and after a positive start to 2025 as we see further growth in our online business and pre-Covid activity levels in our stores, the directors look forward to another successful year.
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LOLA'S CUPCAKES LIMITED
STRATEGIC REPORT (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2024
Principal risks and uncertainties
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The Directors are constantly reviewing potential risks to the business and see the following as principal risks going forward:
We are currently seeing price rises and volatility in many of our edible raw materials, labour costs and utility prices. Though our ingredients are predominantly sourced from overseas suppliers, the business principally buys in Pound Sterling, with the price being impacted by foreign currency movements.
The risk of both currency movement and underlying price rises is mitigated as far as possible by the placing of frequent forward contracts with major suppliers to reduce risk as far as possible of any large movements in raw material pricing.
In these uncertain times, continuing liquidity is a key risk to all businesses and the directors manage the business to ensure it continues to be cash generative. The Company ended the year with £1,252,860 of cash, with no borrowings and has access to an overdraft facility of £350,000 to give the business sufficient flexibility and headroom to meet day to day requirements whilst also planning for future development.
Other risks which Management believe could seriously impact on the performance of the business, include a decline in city centre footfall, as working from home becomes more entrenched, the loss of a major raw material supplier or continuing pressure on sugar based products. Management believes it has sufficient awareness of all possible major risks to manage the Company successfully through any impact of these risks.
Financial key performance indicators
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The Directors consider that the Company's Key Performance Indicators (KPI's) are set out in the Business Review above.
We continue to invest in innovative designs and products, promotional activity and web development to raise brand awareness and drive online sales. We also continue to extend our geographic coverage beyond our traditional South East market.
This report was approved by the board and signed on its behalf.
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LOLA'S CUPCAKES LIMITED
DIRECTORS' REPORT
FOR THE YEAR ENDED 31 DECEMBER 2024
The directors present their report and the financial statements for the year ended 31 December 2024.
Directors' responsibilities statement
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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.
The principal activity of the Company is the manufacture and sale of high quality fresh cakes, cupcakes, brownies and cheese cakes which are sold through our stores or through our successful and growing online platform.
The profit for the year, after taxation, amounted to £1,614,596 (2023 - £609,862).
Dividends declared and paid to shareholders during the year amounted to £NIL (2023 - £200,000).
The directors who served during the year were:
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LOLA'S CUPCAKES LIMITED
DIRECTORS' REPORT (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2024
Engagement with employees
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The Company's policy is to consult and discuss with employees, including at meetings, matters likely to affect employees' interests.
Information about matters of concern to employees is given through information bulletins and reports which seek to achieve a common awareness on the part of all employees of the financial and economic factors affecting the Company's performance.
The directors see the retention and training of employees to be a key driver to the future growth of the business, and accordingly offer training, both work related and extra curricular, to ensure employees remain motivated and committed to the company.
Disabled employees
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.
Matters covered in the Strategic Report
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The Directors have chosen, in accordance with s414C of the Companies Act, to disclose the information relating to principal risk and uncertanties, review of the business, key performance indicators and future developments in the Strategic Report.
Disclosure of information to auditors
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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.
Post balance sheet events
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There have been no significant events affecting the Company since the year end.
Under section 487(2) of the Companies Act 2006, BKL Audit LLP 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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LOLA'S CUPCAKES LIMITED
DIRECTORS' REPORT (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2024
This report was approved by the board and signed on its behalf.
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LOLA'S CUPCAKES LIMITED
INDEPENDENT AUDITORS' REPORT TO THE MEMBERS OF LOLA'S CUPCAKES LIMITED
We have audited the financial statements of Lola's Cupcakes Limited (the 'Company') for the year ended 31 December 2024, which comprise the Statement of Income and Retained Earnings, the Statement of Financial Position 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).
In our opinion the financial statements:
∙give a true and fair view of the state of the Company's affairs as at 31 December 2024 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.
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
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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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LOLA'S CUPCAKES LIMITED
INDEPENDENT AUDITORS' REPORT TO THE MEMBERS OF LOLA'S CUPCAKES 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.
Opinion on other matters prescribed by the Companies Act 2006
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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
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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
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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.
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LOLA'S CUPCAKES LIMITED
INDEPENDENT AUDITORS' REPORT TO THE MEMBERS OF LOLA'S CUPCAKES LIMITED (CONTINUED)
Auditors' responsibilities for the audit of the financial statements
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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 extent to which our procedures are capable of detecting irregularities, including fraud is detailed below:
∙Enquiring of management and those charged with governance around actual and potential litigation and claims;
∙Enquiring of management and those charged with governance to identify any instances of non-compliance with laws and regulations;
∙Reviewing board meeting minutes for all meetings taking place throughout the year and indeed up until the date of signature of these financial statements;
∙Reviewing financial statement disclosures and testing to supporting documentation to assess compliance with applicable laws and regulations;
∙Performing audit work over the risk of management override of controls, including testing of journal entries and other adjustments for appropriateness, evaluating the business rationale of significant transactions outside the normal course of business and reviewing accounting estimates for bias;
∙Reviewing the general ledger in detail for all transactions with related parties;
∙Performing walkthrough testing to ensure systems and controls are operating as recorded, where appropriate.
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.
As part of an audit in accordance with ISAs (UK), we exercise professional judgement and maintain professional scepticism throughout the audit. We also:
∙Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.
∙Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion of the effectiveness of the Company's internal control.
∙Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by the directors.
∙Conclude on the appropriateness of the directors' use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions
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LOLA'S CUPCAKES LIMITED
INDEPENDENT AUDITORS' REPORT TO THE MEMBERS OF LOLA'S CUPCAKES LIMITED (CONTINUED)
that may cast significant doubt on the Company's ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our Auditors' Report to the related disclosures in the financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our Auditors' Report. However, future events or conditions may cause the Company to cease to continue as a going concern.
∙Evaluate the overall presentation, structure and content of the financial statements, including the disclosures, and whether the financial statements represent the underlying transactions and events in a manner that achieves fair presentation.
We communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit.
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.
Nick Bishop FCA (Senior Statutory Auditor)
for and on behalf of
BKL Audit LLP
Chartered Accountants
Statutory Auditor
London
25 June 2025
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LOLA'S CUPCAKES LIMITED
STATEMENT OF INCOME AND RETAINED EARNINGS
FOR THE YEAR ENDED 31 DECEMBER 2024
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Retained earnings at the beginning of the year
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Dividends declared and paid
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Retained earnings at the end of the year
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There were no recognised gains and losses for 2024 or 2023 other than those included in the statement of income and retained earnings.
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The notes on pages 12 to 26 form part of these financial statements.
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LOLA'S CUPCAKES LIMITED
REGISTERED NUMBER: 05927519
STATEMENT OF FINANCIAL POSITION
AS AT 31 DECEMBER 2024
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Debtors: amounts falling due within one year
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Creditors: amounts falling due within one year
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Total assets less current liabilities
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Provisions for liabilities
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The financial statements were approved and authorised for issue by the board and were signed on its behalf by:
The notes on pages 12 to 26 form part of these financial statements.
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LOLA'S CUPCAKES LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2024
The company is a private company limited by shares and registered in England and Wales. The company's registered number and registered office address can be found on the Company Information page.
The principal activity of the company is the manufacture and sale of high quality fresh cakes, cupcakes, brownies and cheese cakes which are sold through our stores or through our successful and growing online platform.
2.Accounting policies
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Basis of preparation of financial statements
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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:
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Financial Reporting Standard 102 - reduced disclosure exemptions
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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).
This information is included in the consolidated financial statements of Lola's Cupcakes (Holdings) Limited as at 31 December 2024 and these financial statements may be obtained from the Company's registered address.
The financial statements have been prepared on the going concern basis, which assumes that the Company will continue to trade for the foreseeable future, being a period of at least twelve months from the date of approval of these financial statements, and will be able to meet its debts as they fall due.
The directors continue to assess the Company’s ongoing operations, working capital needs and access to external financing from bank facilities, or through the continued support from the major shareholder of its parent Company, Lola’s Cupcakes (Holdings) Limited. On the basis of this assessment, and having reviewed the results of the period to date and short and medium term forecasts, the directors have a reasonable expectation that the Company has adequate resources to meet its liabilities as they fall due, for at least twelve months from the date of approval of these financial statements. Thus the directors continue to adopt the going concern basis of accounting in preparing the financial statements.
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LOLA'S CUPCAKES LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2024
2.Accounting policies (continued)
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:
Revenue generated online and in-store are both recognised at the point of sale, when the order is placed or when the goods change hands, respectively.
Other operating income includes electric vehicle grants and licence fees for the use of the Lolas brand by International franchisees.
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Operating leases: the Company as lessee
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Rentals paid under operating leases are charged to profit or loss on a straight-line basis over the lease term.
Interest income is recognised in profit or loss using the effective interest method.
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. Issue costs are initially recognised as a reduction in the proceeds of the associated capital instrument.
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 accruals as a liability in the Statement of Financial Position. The assets of the plan are held separately from the Company in independently administered funds.
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LOLA'S CUPCAKES LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2024
2.Accounting policies (continued)
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Current and deferred taxation
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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 reporting 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 reporting 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 reporting date.
Intangible assets are initially recognised at cost. After recognition, under the cost model, intangible assets are measured at cost less any accumulated amortisation and any accumulated impairment losses.
All intangible assets are considered to have a finite useful life. If a reliable estimate of the useful life cannot be made, the useful life shall not exceed ten years.
The estimated useful lives are as follows:
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Licenses and web platform
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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.
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LOLA'S CUPCAKES LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2024
2.Accounting policies (continued)
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Tangible fixed assets (continued)
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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.
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.
Investments are measured at cost less accumulated impairment.
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 reporting 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.
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Cash and cash equivalents
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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.
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Provisions for liabilities
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Provisions are recognised when an event has taken place that gives rise to a legal or constructive obligation, a transfer of economic benefits is probable and a reliable estimate can be made.
Provisions are measured as the best estimate of the amount required to settle the obligation, taking into account the related risks and uncertainties.
Increases in provisions are charged as an expense to profit or loss.
The Company only enters into basic financial instruments and transactions that result in the recognition of financial assets and liabilities like other debtors and creditors, loans from banks and other third parties and loans to and from related parties.
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LOLA'S CUPCAKES LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2024
2.Accounting policies (continued)
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Financial instruments (continued)
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(i) Financial assets
Basic financial assets, including trade and other debtors, are initially recognised at transaction price, 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.
Such assets are subsequently carried at amortised cost using the effective interest method.
At the end of each reporting period financial assets measured at amortised cost are assessed for objective evidence of impairment. 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 the Statement of Comprehensive Income and Retained Earnings.
Financial assets are derecognised when (a) the contractual rights to the cash flows from the asset expire or are settled, or (b) substantially all the risks and rewards of the ownership of the asset are transferred to another party or (c) control of the asset has been transferred to another party who has the practical ability to unilaterally sell the asset to an unrelated third party without imposing additional restrictions.
(ii) Financial liabilities
Basic financial liabilities, including trade and other creditors, 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 receipts discounted at a market rate of interest.
Trade creditors are obligations to pay for goods or services that have been acquired in the ordinary course of business from suppliers. Trade creditors 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.
Financial liabilities are derecognised when the liability is extinguished, that is when the contractual obligation is discharged, cancelled or expires.
(iii) Offsetting
Financial assets and liabilities are offset and the net amounts presented in the financial statements when there is a legally enforceable right to set off the recognised amounts and there is an intention to settle on a net basis or to realise the asset and settle the liability simultaneously.
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.
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LOLA'S CUPCAKES LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2024
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Judgements in applying accounting policies and key sources of estimation uncertainty
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The preparation of the financial statements requires management to make judgements, estimates and assumptions that affect the amounts reported for assets and liabilities as at the balance sheet date and the amounts reported for revenues and expenses during the year. However, the nature of estimation means that actual outcomes could differ from those estimates.
Estimates and underlying assumptions are continually evaluated and are based on historical experience and other factors, including expectations of future events that are reasonable under the circumstances. Revisions to accounting estimates are recognised in the period in which the estimates are revised and in any future periods affected.
The following judgments (apart from those involving estimates) have had the most significant effect on amounts recognised in the financial statements.
Useful economic lives of tangible assets
The annual depreciation charge for tangible assets is sensitive to changes in the estimated useful economic lives and residual values of the assets. The useful economic lives and residual values are reassessed annually. They are amended when necessary to reflect current estimates, based on technological advancement, future investments, economic utilisation and the physical condition of the assets. See note 12 for the carrying amount of the tangible assets, and accounting policy note 2.11 for the useful economic lives of each class of asset.
Dilapidation provision
The leasehold dilapidation provision is an estimate of the cost of work required to be performed at the end of the lease, to return the leasehold property to the condition it was in at the commencement of the lease term. The estimated value of this work is reassessed annually and is amended when necessary to reflect any further changes made to the leasehold property or changes in estimated costs during the year. See note 18 for the carrying amount of the dilapidation provision.
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An analysis of turnover by class of business is as follows:
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Sale of cakes and cupcakes
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Analysis of turnover by country of destination:
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LOLA'S CUPCAKES LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2024
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During the year, the Company obtained the following services from the Company's auditors:
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Fees payable to the Company's auditors for the audit of the Company's financial statements
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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.
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LOLA'S CUPCAKES LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2024
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Staff costs, including directors' remuneration, were as follows:
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Cost of defined contribution scheme
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The average monthly number of employees, including the directors, during the year was as follows:
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Remuneration for qualifying services
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Company contributions to defined contribution pension schemes
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During the year retirement benefits were accruing to 1 director (2023 - 1) in respect of defined contribution pension schemes.
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The highest paid director received remuneration of £189,492 (2023 - £209,601).
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The value of the Company's contributions paid to a defined contribution pension scheme in respect of the highest paid director amounted to £1,321 (2023 - £1,321).
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The total accrued pension provision of the highest paid director at 31 December 2024 amounted to £257 (2023 - £257).
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LOLA'S CUPCAKES LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2024
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Current tax on profits for the year
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Adjustments in respect of previous periods
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Origination and reversal of timing differences
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Factors affecting tax charge for the year
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The tax assessed for the year is higher than (2023 - lower than) the standard rate of corporation tax in the UK of 25% (2023 - 23.5%). The differences are explained below:
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Profit on ordinary activities before tax
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Profit on ordinary activities multiplied by standard rate of corporation tax in the UK of 25% (2023 - 23.5%)
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Expenses not deductible for tax purposes, other than goodwill amortisation and impairment
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Capital allowances for year in excess of depreciation
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Profit and loss on sale of fixed assets
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Total tax charge for the year
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Factors that may affect future tax charges
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There were no factors that may affect future tax charges.
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LOLA'S CUPCAKES LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2024
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Licenses and web platform
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During the year the Company continued the in-house development of its new online web site, based on a “Shopify” platform to replace its existing hosted platform. No amortisation has been provided on the new site, which is expected to go live in Q1 2025. The existing web site, which is fully amortised will be written off once the new site is fully operational. Accordingly, no amortisation has been provided in the current year.
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LOLA'S CUPCAKES LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2024
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Charge for the year on owned assets
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Other fixed asset investments
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LOLA'S CUPCAKES LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2024
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The difference between purchase price or production cost of stocks and their replacement cost is not material.
The carrying value of stocks are stated net of impairment losses totalling £NIL (2023 - £NIL). Impairment losses totalling £NIL (2023 - £NIL)were recognised in profit and loss.
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Amounts owed by group undertakings
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Prepayments and accrued income
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Amounts owed by group undertakings are unsecured, do not bear interest and are repayable on demand.
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Creditors: Amounts falling due within one year
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Amounts owed to group undertakings
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Other taxation and social security
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Accruals and deferred income
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Amounts owed to group undertakings are unsecured, do not bear interest and are repayable on demand.
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LOLA'S CUPCAKES LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2024
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Charged to profit or loss
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The provision for deferred taxation is made up as follows:
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Accelerated capital allowances
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Allotted, called up and fully paid
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1,000 (2023 - 1,000) Ordinary shares of £1.00 each
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Profit and loss account
The profit and loss account represents total undistributed profits less losses.
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LOLA'S CUPCAKES LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2024
The Company operates a defined contributions pension scheme. The assets of the scheme are held separately from those of the Company in an independently administered fund. Contributions totalling £161,048 (2023 - £143,223) were paid to the fund during the year. Contributions totalling £43,272 (2023 - £38,444) were payable to the fund at the reporting date and are included in creditors.
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Commitments under operating leases
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At 31 December 2024 the Company had future minimum lease payments due under non-cancellable operating leases for each of the following periods:
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Later than 1 year and not later than 5 years
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23.Other financial commitments
At the year end, the Company had entered into 4 forward contracts at a cost of £331,621. The impact of the forward contract is deemed to be immaterial and is not included within the financial statements.
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Related party transactions
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The Company has taken advantage of the exemption conferred by FRS 102 section 33.1 A from the requirement to disclose transactions with other wholly owned group undertakings.
Refer to note 8 for details of directors' remuneration paid to those charged with governance.
The Company paid management charges to a business in which a key member of the management personnel of the Company has a controlling interest. Fees incurred amounted to £160,192 (2023 - £180,000).
The Company paid consultancy fees to a business in which a key member of the management personnel of the Company has a controlling interest. Fees incurred amounted to £20,000 (2023 - £20,000).
The Company paid consultancy fees to a shareholder of the controlling party. Fees incurred amounted to £30,000 (2023 - £30,000).
At the year end, an amount of £252,357 (2023 - £251,654) was owed by a key member of the management personnel of the parent company to the Company. Interest income of £5,000 (2023 - £14,033) was received from the same related party. The amount owed includes advances of £50,000 made on 11 October 2021, £100,000 made on 10 January 2022, £50,000 made on 15 March 2022 and £50,000 made on 17 June 2022 at a commercial rate of 2% per annum.
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LOLA'S CUPCAKES LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2024
The immediate and ultimate parent undertaking is Lola's Cupcakes (Holding) Limited, a company registered in the UK. Its registered office is Hillsdown House 1st Floor, 32 Hampstead High Street, London NWS 1QD.
Lola's Cupcakes (Holdings) Limited prepares consolidated financial statements.
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