CROSSCO_(1432)_LIMITED - Accounts
CROSSCO_(1432)_LIMITED - Accounts
The directors present the strategic report for the year ended 30 April 2022.
Crossco 1432 Limited is an intermediate holding company within the Crossco 1427 group of companies and is
expected to remain as such for the foreseeable future. The Company directly owns all of Cutwel Limited trading
operations and employs and recharges key management personnel via management service charge to Cutwel Limited.
The company holds loan notes and bank debt drawn to finance the acquisition of the share capital of Cutwel and made payments for accrued loan notes interest in the year and continued to service interest payments and repayment instalments on bank debt.
The Company has integrated into its ultimate parent company's (Crossco 1427 Limited) comprehensive system of risk management, a process the allows the Directors to identify, evaluate and manage potential risks and uncertainties that could have a material impact on the Company's performance.
The Company does not trade therefore the primary risks and uncertainties faced by the Company are centred around Group liquidity supporting the funding held in the Company. Working capital efficiency and liquidity risks for the Group are mitigated via close weekly monitoring of cashflow and working capital.
Future developments
Management do not believe there are any future developments to note other than those noted in the risk management and review of the business section. The business is continuing to grow.
As an intermediate holding company which holds and services debt for the group, the directors focus on net external debt (loan notes and bank loans) as a key performance indicator for the company. As at 30 April 2022 this stood at £19.9m (2021: £21.2m).
On behalf of the board
The directors present their annual report and financial statements for the year ended 30 April 2022.
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.
The directors who held office during the year and up to the date of signature of the financial statements were as follows:
BHP LLP were appointed as auditor to the company and in accordance with section 485 of the Companies Act 2006, a resolution proposing that they be re-appointed will be put at a General Meeting.
The directors have a reasonable expectation that the Company has adequate resources to continue in operational existence based on the following assessments, considering the principal risks and uncertainties of the Company;
Management completed a forecast to April 2025, taking into consideration the improved performance during this financial year. The budget for next financial year shows continued good liquidity.
Detailed weekly cashflow forecasts, forward looking 12 months which incorporate the assumptions from budget and reforecasts are maintained are reviewed on a monthly basis.
The company showed a net liability position at year end of £9.9m (2021: £7.0m), the company is supported by loan notes issued by the majority shareholder which are not due for repayment until 2025.
Thus the directors continue to adopt the going concern basis of accounting in preparing the financial statements.
select suitable accounting policies and then apply them consistently; make judgements and accounting estimates that are reasonable and prudent; prepare the financial statements on the going concern basis unless it is inappropriate to presume that the company will continue in business.
give a true and fair view of the state of the company's affairs as at 30 April 2022 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.
Basis for opinion
Conclusions relating to going concern
In auditing the financial statements, we have concluded that the directors' use of the going concern basis of accounting in the preparation of the financial statements is appropriate.
Based on the work we have performed, we have not identified any material uncertainties relating to events or conditions that, individually or collectively, may cast significant doubt on the company's ability to continue as a going concern for a period of at least twelve months from when the financial statements are authorised for issue.
Our responsibilities and the responsibilities of the directors with respect to going concern are described in the relevant sections of this report.
Other information
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.
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.
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.
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 extent to which our procedures are capable of detecting irregularities, including fraud, is detailed below.
We gained an understanding of the legal and regulatory framework applicable to the company and the industry in which it operates and considered the risk of acts by the company that were contrary to applicable laws and regulations, including fraud. We designed audit procedures to respond to the risk, recognising that the risk of not detecting a material misstatement due to fraud is higher than the risk of not detecting one resulting from error, as fraud may involve deliberate concealment by, for example, forgery or intentional misrepresentations, or through collusion.
We focussed on laws and regulations, relevant to the company, which could give rise to a material misstatement in the financial statements. Our tests included agreeing the financial statement disclosures to underlying supporting documentation, enquiries with management, review of company minutes and legal expenses. There are inherent limitations in the audit procedures described and, the further removed non-compliance with laws and regulations is from the events and transactions reflected in the financial statements, the less likely we would become aware of it.
As part of our audit, we addressed the risk of management override of internal controls, including testing of journals and review of nominal ledger. We evaluated whether there was evidence of bias by the directors that represented a risk of material misstatement due to fraud.
A further description of our responsibilities is available on the Financial Reporting Council’s website at: https://www.frc.org.uk/auditorsresponsibilities. This description forms part of our auditor's report.
Use of our report
This report is made solely to the company's member 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 member those matters we are required to state to the member 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 member, for our audit work, for this report, or for the opinions we have formed.
The profit and loss account has been prepared on the basis that all operations are continuing operations.
Crossco (1432) Limited is a private company limited by shares incorporated in England and Wales. The registered office is Unit A, Riverside Drive, Cleckheaton, West Yorkshire, England, BD19 4DH.
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 £.
This company is a qualifying entity for the purposes of FRS 102, being a member of a group where the parent of that group prepares publicly available consolidated financial statements, including this company, which are intended to give a true and fair view of the assets, liabilities, financial position and profit or loss of the group. The company has therefore taken advantage of exemptions from the following disclosure requirements:
Section 7 ‘Statement of Cash Flows’: Presentation of a statement of cash flow and related notes and disclosures;
Section 11 ‘Basic Financial Instruments’ and Section 12 ‘Other Financial Instrument Issues: The disclosure requirements of paragraphs 11.42, 11.44, 11.45, 11.47, 11.48(a)(iii), 11.48(a)(iv), 11.48(b), 11.48(c), 12.26, 12.27, 12.29(a), 12.29(b), and 12.29A;
Section 26 ‘Share based Payment’: Share based payment arrangements required under FRS 102 paragraphs 26.18(b), 26.19 to 26.21 and 26.23;
Section 33 ‘Related Party Disclosures’: Compensation for key management personnel.
The financial statements of the company are consolidated in the financial statements of Crossco (1427) Limited. These consolidated financial statements are available from its registered office, Unit A, Riverside Drive, Cleckheaton, BD19 4DH.
• Management completed a forecast to April 2025, taking into consideration the improved performance during this financial year. The b udget for next financial year shows continued good liquidity. • Detailed weekly cashflow forecasts, forward looking 12 months which incorporate the assumptions from budget and reforecasts are maintained are reviewed on a monthly basis.
Other operating income relates to management charges receivable from the company's subsidiary undertaking.
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, 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.
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.
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.
Basic financial liabilities, including creditors, bank loans, loans from fellow group companies and preference shares that are classified as debt, 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.
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.
Financial liabilities are derecognised when the company’s contractual obligations expire or are discharged or cancelled.
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.
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 Statement of Financial Position date and the amounts reported for the revenues and expenses during the year. However, the nature of estimation means that actual outcomes could differ from those estimates. The following judgements (apart from those involving estimates) have had the most significant effect on amounts recognised in the financial statements.
Impairment of investment
The Group reviews, on an annual basis, whether the investment has suffered any impairment. The recoverable amount is determined based from two calculations.
estimating future cash flows by choosing a discount rate to calculate the present value of the cash flows.
obtaining fair value at the date of measurement.
The higher of the two outputs is used for the assessment. Actual outcomes may vary.
The audit fees of Crossco (1432) Limited have been paid through its subsidiary undertaking, Cutwel Limited.
The average monthly number of persons (including directors) employed by the company during the year was:
Their aggregate remuneration comprised:
The number of directors for whom retirement benefits are accruing under defined contribution schemes amounted to 3 (2021 - 3).
As total directors' remuneration was less than £200,000 in the current year, no disclosure is provided for that year.
The actual charge for the year can be reconciled to the expected credit for the year based on the profit or loss and the standard rate of tax as follows:
Details of the company's subsidiaries at 30 April 2022 are as follows:
The other loans are secured by a charge on present and future property, revenue, rights and interests of every kind.
The bank loans are secured by a fixed and floating charge over the company's property, assets and rights.
The amounts owed to group undertakings are unsecured, repayable on demand and interest is charged at 10% per annum.
The other loans are secured by a charge on present and future property, revenue, rights and interests of every kind.
The bank loans are secured by a fixed and floating charge over the company's property, assets and rights.
In respect of liabilities payable or repayable by instalments, the following is included within creditors: amounts falling due within one year: £600,000 (2021: £600,000), amounts falling due within two to five years: £4,715,589 (2021: £5,265,214).
In respect of liabilities repayable otherwise than by instalments £14,445,000 (2021: £14,445,000) is due within five years from the reporting date.
Loan notes
During the financial year 2019 and to finance the acquisition of 100% of the share capital of Cutwel Limited, the company created and issued £14,400,000 A fixed rate (10%) redeemable loan notes, with a further £7,500,000 A1 fixed rate (10%) redeemable loan notes. In addition, £45,000 A2 fixed rate (10%) redeemable loan notes were issued to key management. Two classes of loan notes were issued during 2019.
These loan notes are treated in the financial statements at amortised cost.
The balance on each class of loan note at 30 April 2022 was:
Series A1 Loan notes - £nil (2021: £nil)
Series A2 Loan notes - £14,445,000 (2021: £15,327,788)
Series A1 and A2 loan notes were secured by a fixed and floating charge over the company's property, assets and rights. The loan notes are treated in the financial statements at amortised cost.
At 30 April 2022 of the loan notes in issue, £14,400,000 (2021: £14,400,000) are held by NorthEdge Capital Fund II, LP and NorthEdge Capital Coinvestment II, LP, The fund being the majority shareholder of the company. Interest of £nil (2021: £389,164) has been accrued on the loan notes in the year and rolled-up in line with the loan note agreement. The interest charged in the year amounted to £1,490,120 (2021: £1,507,273). The additional £45,000 (2021: £45,000) are held by key management. Interest of £4,500 (2021: £4,500) has been accrued on the loan notes in the year and rolled-up in line with the loan notes agreement.
The A2 loan notes will be repaid in full by 18 May 2025.
Interest is included within creditors and disclosed as falling due within one year.
Series A2 loan notes are listed on the International Stock Exchange.
Bank loans
The Group operates with two bank loan facilities.
Facility A bears interest at a floating rate based on SONIA plus 3.06%. The facility is repayable in instalments, commencing on 31 October 2018 and will be repaid in full by 18 May 2024. The balance in respect of Facility A at 30 April 2022 was £900,000 (2021: £1,500,000).
Facility B bears interest at a floating rate based on SONIA plus 3.56%. The facility is repayable in full on 18 May 2024. The balance in respect of Facility B at 30 April 2021 was £4,500,000 (2021: £4,500,000).
Included within creditors: amounts falling due after more than one year is £4,715,589 (2021: £5,265,214).
Interest on the bank loan of £213,480 (2021: £235,288) was paid during the year in quarterly instalments. The bank loans are secured by a fixed and floating charge over the company's property, assets and right.
The company operates a defined contribution pension scheme for all qualifying employees. The assets of the scheme are held separately from those of the company in an independently administered fund.
The company's parent is Crossco (1427) Limited, a company registered in England and Wales. The company's ultimate controlling party is NorthEdge Capital Fund II, LP.
The registered office of NorthEdge Capital Fund II, LP is: 13th Floor Number One Spinningfields, 1 Hardman Square Spinningfields, Manchester, M3 3EB.
The smallest and largest group in which these financial statements are consolidated into is the financial statements of Crossco (1427) Limited.