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REGISTERED NUMBER: 03574622 (England and Wales)















LONETREE LIMITED

Strategic Report, Report of the Director and

Financial Statements for the Year Ended 31 December 2022






LONETREE LIMITED (REGISTERED NUMBER: 03574622)






Contents of the Financial Statements
for the year ended 31 December 2022




Page

Company Information 1

Strategic Report 2 to 4

Report of the Director 5 to 9

Report of the Independent Auditors 10 to 11

Income Statement 12

Other Comprehensive Income 13

Balance Sheet 14

Statement of Changes in Equity 15

Cash Flow Statement 16

Notes to the Cash Flow Statement 17

Notes to the Financial Statements 18 to 26


LONETREE LIMITED

Company Information
for the year ended 31 December 2022







Director: R M Mounsey





Secretary: G M Mounsey





Registered office: Pentresite House
Rhydargaeau Road
Carmarthen
SA32 7AJ





Registered number: 03574622 (England and Wales)





Auditors: Haines Watts Birmingham LLP
5-6 Greenfield Crescent
Edgbaston
Birmingham
West Midlands
B15 3BE

LONETREE LIMITED (REGISTERED NUMBER: 03574622)

Strategic Report
for the year ended 31 December 2022

The director presents his strategic report for the year ended 31 December 2022.

Review of business
The company operates 16 stores in the South Wales region, employing more than 1,450 members of staff.

Store and delivery sales profitability, although strong in the first half of 2022, has been impacted in the second half of the year by amongst other things the increase in VAT within the hospitality sector back to the standard rate of 20% from 1 April 2022, a volatile supply chain and rising costs base.

Given the direct link between our approach to pricing, the external environment, and our success in relation to our customers, we will continue to remain close to understanding this relationship and look constantly to evaluate how our internal actions are impacting our customers.

The financial position of the company remains healthy with the balance sheet showing net assets of £7.51 million, compared to £10.37 million in 2021.

Key performance indicators
Sales for the year amounted £65.92 million, an increase of £2.03 million from 2021 giving an overall sales increase of approximately 3.18%. During the year one restaurant was purchased and during 2021 one restaurant was sold. Comparing the remaining fifteen restaurants on a like-for-like basis, sales increased by 3.01%.

The gross profit margin is 63.61% compared to 66.77% in 2021 and is in line with expectations.

Future developments
2023 will continue to be impacted from ever-volatile external environments, with consumer trends likely changing ever more frequently due to on-going economic challenges. Consumer confidence remains at record low levels, and it is currently unknown how this will develop in the short term.

It is anticipated that consumers will be hit hardest in Q1 while they continue to adjust to high energy bills alongside higher prices for essential goods. We believe it is likely that consumers will look to reduce spend after the first full festive period since 2019 (Pre Covid-19). Some of the impact from the increased pressure on consumer spending will be masked in January and February as we will be comparable to tail end of Omicron which suppressed Guest Counts ('GC') in Q1 2022.

We will expect strong sales growth as a result of our menu and marketing plans across the year, but will see a significant benefit in Q1, Q2 and Q3 as a result of McCrispy and the permanent launch of McSpicy products.

We anticipate strongest sales throughout the summer of 2023 as we execute higher levels of pricing alongside seeing continued benefit from our digital plans including MyMcDonald's rewards. We anticipate delivery to see softer growth in 2023 as the market continues to normalise after the pandemic and we achieve our new post COVID baseline for the channel, however we expect to continue to grow market share ahead of our competitors, and boost sales through Deliveroo and the further optimisation of our delivery operations.

Given the direct link between our approach to pricing, the external environment, and our success in relation to our customers, we will continue to remain close to understanding this relationship and look to constantly evaluate how our internal actions are impacting our customers.

In 2023, we expect both Instores and Drive Thrus to see similar levels of growth with Instores likely to see a greater GC impact from the Cost of Living Crisis, however this will be slightly offset due to higher proportion of sales flowing through from McDelivery which will have an increased pricing benefit.


LONETREE LIMITED (REGISTERED NUMBER: 03574622)

Strategic Report
for the year ended 31 December 2022

Principal risks and uncertainties
The company operates in a highly competitive market. High Street consumer behaviour impacts the company's turnover and the variability of commodity prices impacts profitability.

The company is continually assessing all risks with an aim to mitigate any future threats these may have on the business.

Economic risk
Following some very challenging times, we are optimistic about the economic future. Customer confidence continues to rise and unemployment rates are falling. A cautious approach is still required as real disposable income continues to decline as the Cost of Living and interest rates continue to rise. Principal risks are increasing commodity prices, increased utility costs and labour rates adding pressure to margins with significant upward movements in interest rates that may also increase costs. The first mentioned risk is controlled by McDonald's collective purchasing initiatives.

The level of borrowing is such that interest rate increases are manageable.

Regulatory risks
The company's operations demand a high level of compliance within a wide range of regulatory requirements. In particular -
* Health and safety
* Hygiene procedures
* Employment laws
* Licensing
The above, along with a number of other areas, are monitored in detail by McDonald's, as being in the fast food industry brings a high level of regulatory concerns.

Consumer taste
Any material changes in the way the consumer views the fast food industry could have an adverse effect on the company. However, this can also work in the opposite direction and could assist the company to achieve growth. As a result, the company focuses, in detail, on recognising demographic trends, ensuring innovation and the use of the freshest and highest quality products through its stores. The company has strict policies to ensure that all stores are maintaining the McDonald's ethos.

Competitors
The fast food market is a very competitive market, with a high number of large competitors trading in the sector. In order to remain as one of the main players, McDonald's have dedicated teams who focus on ensuring they remain a leading company within the market. This allows them to compete with other large fast food chains.

With these risks and uncertainties in mind, we are aware that any plans for the future development of the business may be subject to unforeseen future events outside our control, hence we are constantly assessing our plans in line with the current environment.


LONETREE LIMITED (REGISTERED NUMBER: 03574622)

Strategic Report
for the year ended 31 December 2022

Section 172(1) statement
Statement by the director in performance of his statutory duty in accordance with s172(1) Companies Act 2006:

The director takes into account the likely consequences of long-term decisions; builds relationships with stakeholders; understands the importance of engaging with employees; understands the impact of operations on the communities within which he operates; and attributes importance to behaving as a responsible business.

The director considers that he has acted in the way he considers, in good faith, would be most likely to promote the success of the company for the benefit of its members as a whole (having regard to the stakeholders and matters set out in s172(1)(a-f) of the Act) in the decisions taken during the year ended 31 December 2022. In particular by reference to the approval of the business plan, which is updated on an annual basis. The business plan was designed to have a long-term beneficial impact on the company and to contribute to its success in delivering high quality quick-service food.

The employees are fundamental to the delivery of the plan. The director aims to be a responsible employer in his approach the to pay and benefits that employees receive. The health, safety and wellbeing of employees is one of the primary considerations in the way the director does business.

As director, my intention is to behave responsibly and ensure that management operate the business in a responsible manner, operating within the high standards of business conduct and good governance expected for a business such as this, and in doing so, will contribute to the delivery of the plan.

On behalf of the board:





R M Mounsey - Director


18 October 2023

LONETREE LIMITED (REGISTERED NUMBER: 03574622)

Report of the Director
for the year ended 31 December 2022

The director presents his report with the financial statements of the company for the year ended 31 December 2022.

Principal activity
The principal activity of the company in the year under review was that of the operation of McDonald's franchised restaurants.

Dividends
Interim dividends per share were paid as follows:
Ordinary A £1 shares £35.33 - 31 March 2022
Ordinary B £1 shares £106.00 - 31 March 2022


The director recommends that no final dividends be paid.

The total distribution of dividends for the year ended 31 December 2022 will be £ 3,180,000 .

Research and development
The company does not carry out any independent research and development. However the franchisor, McDonald's Restaurants Limited, carries out its own research and development on behalf of all franchisees. The company makes a contribution towards this through its existing payments to the franchisor.

Director
R M Mounsey held office during the whole of the period from 1 January 2022 to the date of this report.

Going concern
The directors have considered the application of the going concern basis of accounting in doing so they have considered the period from the date of this report until 31 December 2024. The directors have a reasonable expectation that the company has adequate resources to continue in operational existence for the foreseeable future. Thus, they continue to adopt the going concern basis of accounting in preparing the annual financial statements.

Employment of disabled persons
The company operates a policy of giving full & fair consideration to employment applications from disabled persons and to the continued employment and training of employees who become disabled.

Provision of information to employees
The company has a system for providing employees with information of concern to them . It also consults employees on a regular basis so that their views can be taken into account in making decisions affecting them. It regularly explains to employees the financial and economic factors affecting the performance of the company and makes them aware of the provision of training, career development and promotion of disabled employees.

Engagement with employees
Employees are fundamental to the delivery of the plan. I aim to be a responsible employer in my approach to the pay and benefits our employees receive. The health, safety and wellbeing of my employees is one of my primary considerations in the way I do business.

Engagement with suppliers, customers and others
The director takes into account the likely consequences of long-term decisions; builds relationships with stakeholders; understands the impact of his operations on the communities within which he operates; and attributes importance to behaving as a responsible business.

Statement of corporate governance arrangements
The company is owned and controlled by a single director. By reference to the Corporate Governance Guidance and Principles for Unlisted Companies in the UK, published by the Institute of Directors, the director has established a framework of company processes and attitudes that add value to the business, help build its reputation and ensure its long-term continuity and success. This framework aligns with the business system and processes established by the franchisor and contributes to the continued success of the company.

Streamlined energy and carbon reporting
In line with the government's streamlined energy and carbon reporting requirements we are required to report our organisation's carbon emissions for the period 1st January 2022 to 31st December 2022 against our 2020 baseline.

Our emissions are reported using the financial control boundary and the methodology used aligns with Defra's Environmental reporting guidelines (2019) and uses the UK government's greenhouse gas reporting conversion factors (2021) to quantify emissions.


LONETREE LIMITED (REGISTERED NUMBER: 03574622)

Report of the Director
for the year ended 31 December 2022

Scope of reporting



Emissions source
1st January 2021-
31st December
2021
1st January 2022-
31st December
2022


Change

%
Change

Direct Emissions from Mobile Combustion
Sources - Franchisee Vehicle Fuel
Consumption


-


-


-


-%
Direct Emissions from Stationary
Combustion - Franchisee Natural Gas
Consumption


232.0


202.6


-29.4


-12.7%
Direct Emissions From Stationary
Combustion - Other Fuel Consumption

-

-

-

-%
Total Scope 1 (tCO2e) 232.0 202.6 -29.4 -12.7%

Indirect Emissions from Franchisee
Purchased Electricity

1,427.0

1,452.4

25.4

1.8%
Total Scope 2 (tCO2e) 1,427.0 1,452.4 25.4 1.8%

Total Scope 1 & 2 (tCO2e) - Location
Based

1,659.0

1,655.0

-4.0

-0.2%

Fuel Consumed by Personal Vehicles used
for Business Activities - Grey Fleet

8.2

14.0

5.8

71.0%
Direct Emissions From Stationary
Combustion - Natural Gas Consumption at
Landlord Leased Restaurants


-


-


-


-%
Direct Emissions From Stationary
Combustion - Other Fuel Consumption at
Landlord Leased Restaurants


-


-


-


-%
Indirect Emissions From Purchased
Electricity of Landlord Leased Restaurants

-

-

-

-%
Total Scope 3 (tCO2e) 8.2 14.0 5.8 71.0%

Total Scope 1, 2 & 3 (tCO2e) 1,667.2 1,669.0 1.8 0.1%

Intensity Metrics
Annual Turnover (£M) 63.9 65.9 2.0 3.1%
Scope 1 & 2 emissions per unit
(tCO2e/£M Turnover)

26.0

25.1

-0.9

-3.5%

Energy Consumption by source (kWh)
Electricity 6,720,533 7,510,482 789,949 11.8%
Gas 1,258,016 1,110,055 -147,961 -11.8%

Purchased Fuel

-

-

-

-%
Company Car - - - -%
Grey Fleet Vehicle 20,751 54,900 34,149 164.6%
Total 7,999,300 8,675,437 676,137 8.5%

Absolute emissions compared to our baseline have increased this year due to an increase in business activity. Covid 19 restrictions limited our operations during the baseline as restaurants were required to close for part of the year. This increase broadly falls in line with the amount of time the restaurants were closed or operating at limited capacity. Overall total scope 1 and 2 emissions fell by 0.2% and scope 3 emissions rose by 71.0%. Total emission increased by 8.5%. This can be mainly attributed to a 11.8% increase in electricity usage.

Our largest source of emissions is a direct result of electricity consumption, followed by natural gas and purchased fuels used for our restaurant kitchens and heating. As the United Kingdom moves towards reducing its energy use to meet the requirements of Net Zero Carbon Emissions by 2050, our overall strategy is to pursue a program of energy efficiency combined with carbon mitigation measures such as the utilisation of renewable electricity. This will be bolstered with programs to reduce and decarbonise heat across our estate.

Notable initiatives carried out this year are as follows:
- The increasing use of virtual calls, meetings and training sessions via Zoom or Teams.

LONETREE LIMITED (REGISTERED NUMBER: 03574622)

Report of the Director
for the year ended 31 December 2022


Further information on our calculations can be found in our GHG Methodology statement.

Greenhouse Gas (GHG) Reporting Methodology Statement

Reporting Period

Emissions are reported against the accounting year covering the period 1 January to 31 December 2022.

Reporting Boundary

Financial Control Approach - McDonalds reports any emissions from its operations for which it can directly influence financial and operating policies to gain economic benefit. This is focussed on energy consumed in buildings where McDonalds Franchisee occupy and/or are the bill payer, this includes vacant units where they pay the bill until it is reoccupied or disposed of. This is restricted to the UK (United Kingdom) where we have full financial control over our operations.

Greenhouse Gases Reported

All greenhouse gas emissions are reported in tonnes of carbon dioxide equivalent (tCO2e) to account for all six of the Kyoto Protocol GHG's.

Emissions Factors

Government's Greenhouse gas reporting conversion factors for 2020 (for baseline year's energy use), 2021 (for 2021-year's energy use) and 2022 (for 2022-year's energy use).

Baseline Year

Covers the period 1st January 2020 to 31st December 2020, as this is the first year required to report emissions under the SECR (Streamlined Energy & Carbon Reporting) legislation.

Intensity Ratio

McDonalds uses annual turnover (tCO2e/£) to normalise and compare its emissions over time. McDonalds also uses an average cheque per site for an intensity metric figure.

Exclusions

McDonalds do not currently report fugitive emissions (refrigerant leakage) from refrigeration and air conditioning systems in leased properties or fleet. This is due to the difficulty in obtaining centralised data on refrigerant top-ups and the fact most of our buildings are out of scope as franchisees manage the HVAC (Heating, Ventilation and Air Conditioning) systems. Given the size and types of emission sources listed by McDonalds, fugitive emissions are expected to be a small proportion of total emissions and are therefore considered immaterial.

Scope of Emissions

Scope 1 - Direct Emissions Scope 2 - Indirect Emissions Scope 3 - Other Indirect
Emissions

On-site Fuel Combustion: Purchased Electricity: Upstream Leased Assets
Gas and fuel directly purchased for
heating or generation across property
managed by the McDonald's franchisee.
Electricity directly purchased
across property managed by the
McDonald's franchisee.
Gas and electricity recharges
across leased property
managed by the landlord.
Company Vehicles: Grey Fleet
Fuel purchased for fleet vehicles
managed and owned by the McDonald's
franchisee.
Fuel purchased for staff
personal vehicles used for
business activities.
Fugitive Emissions 1:
Refrigerant leaks from air-conditioning (RAC) equipment in leased assets and fleet vehicles managed and owned by the McDonald's franchisee.

Fugitive emissions are currently not reported as outlined in the exclusions statement.

LONETREE LIMITED (REGISTERED NUMBER: 03574622)

Report of the Director
for the year ended 31 December 2022


Process

McDonald's follow the reporting approach set out in the UK Government's Environmental Reporting Guidance (2019) to ensure that reporting standards are robust and transparent.

For most of its major emissions sources primary data from AMR meter readings, utility bills and expensed claims. Emissions data is collated centrally by Mitie Energy's Sustainability team who have overall responsibility for ensuring the calculations and methodology are correct.


Data Sources

Scope 1 and 2:
Gas Consumption Utility bills are verified through Mitie's bureau service.
Any billing data is cross referenced against half hourly
and meter read data where available.

Company Vehicles Fleet Fuel Card data records provide the amount of fuel
purchased for business purposes.

Purchased Electricity Utility bills are verified through Mitie's bureau service.
Any billing data is cross referenced against half hourly
and meter read data where available.

Scope 3:
Grey Fleet Mileage claims are provided.

Upstream Leased Assets Landlord statements are used where available (and
applicable). Where unavailable (and applicable) landlord
recharge data is estimated based on a typical
restaurant's consumption profile.

Estimations

Where building utility data is unavailable, estimations are made based on an average restaurant (or site) type of consumption for McDonalds' whole portfolio. For sites where invoice data is only available for a partial period, the available data is apportioned using an average kWh/day figure.

Disclosure in the strategic report
The Strategic report includes a statement by the directors in performance of their statutory duties in accordance with s172(1) Companies Act 2006.

Statement of director's responsibilities
The director is responsible for preparing the Strategic Report, the Report of the Director and the financial statements in accordance with applicable law and regulations.

Company law requires the director to prepare financial statements for each financial year. Under that law the director has 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 director must not approve the financial statements unless he is 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 director is required to:

-select suitable accounting policies and then apply them consistently;
-make judgements and accounting estimates that are reasonable and prudent;
-state whether applicable 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.


LONETREE LIMITED (REGISTERED NUMBER: 03574622)

Report of the Director
for the year ended 31 December 2022

Statement of director's responsibilities - continued
The director is 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 him to ensure that the financial statements comply with the Companies Act 2006. He is 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 as to disclosure of information to auditors
So far as the director is aware, there is no relevant audit information (as defined by Section 418 of the Companies Act 2006) of which the company's auditors are unaware, and he has taken all the steps that he ought to have taken as a director in order to make himself aware of any relevant audit information and to establish that the company's auditors are aware of that information.

Auditors
The auditors, Haines Watts Birmingham LLP, are deemed re-appointed under Section 487(2) of the Companies Act 2006.

On behalf of the board:





R M Mounsey - Director


18 October 2023

Report of the Independent Auditors to the Members of
Lonetree Limited

Opinion
We have audited the financial statements of Lonetree Limited (the 'company') for the year ended 31 December 2022 which comprise the Income Statement, Other Comprehensive Income, Balance Sheet, Statement of Changes in Equity, Cash Flow Statement and Notes to the Cash Flow Statement, Notes to the Financial Statements, 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 2022 and of its profit for the year then ended;
-have been properly prepared in accordance with United Kingdom Generally Accepted Accounting Practice; and
-have been prepared in accordance with the requirements of the Companies Act 2006.

Basis for opinion
We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and applicable law. Our responsibilities under those standards are further described in the Auditors' responsibilities for the audit of the financial statements section of our report. We are independent of the company in accordance with the ethical requirements that are relevant to our audit of the financial statements in the 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 director's 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 director with respect to going concern are described in the relevant sections of this report.

Other information
The director is responsible for the other information. The other information comprises the information in the Strategic Report and the Report of the Director, but does not include the financial statements and our Report of the Auditors thereon.

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.

In connection with our audit of the financial statements, 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 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 the audit:
- the information given in the Strategic Report and the Report of the Director for the financial year for which the financial statements are prepared is consistent with the financial statements; and
- the Strategic Report and the Report of the Director have been prepared in accordance with applicable legal requirements.

Matters on which we are required to report by exception
In the light of the knowledge and understanding of the company and its environment obtained in the course of the audit, we have not identified material misstatements in the Strategic Report or the Report of the Director.

We have nothing to report in respect of the following matters where 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 director's remuneration specified by law are not made; or
- we have not received all the information and explanations we require for our audit.

Report of the Independent Auditors to the Members of
Lonetree Limited


Responsibilities of director
As explained more fully in the Statement of Director's Responsibilities set out on pages eight and nine, the director is 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 director determines 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 director is 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 director either intends to liquidate the company or to cease operations, or has no realistic alternative but to do so.

Auditors' responsibilities for the audit of the financial statements
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue a Report of the Auditors 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.

The extent to which our procedures are capable of detecting irregularities, including fraud is detailed below:

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:

Based on our understanding of the industry, we identified that the principal risks of non-compliance related to breaches of health and safety, including food hygiene. We considered the extent to which non compliance might have a material affect on the financial statements. We also considered those laws and regulations that have a direct impact on preparation of the financial statements, such as the Companies Act 2006. We examined management's incentives and opportunities for fraudulent manipulation of the financial statements (including the risk of overriding of controls) and determined that the principal risks were relating to management bias in accounting estimates, in particular those of accrued liabilities and the useful life of tangible assets. We also discussed with management the possibility of non-compliance with health and safety and food hygiene regulations and reviewed the management controls in place to detect such irregularities. Audit procedures included challenging assumptions made by management in their significant accounting estimates. There are inherent limitations in the Audit procedures described above and the further removed non-compliance with laws and regulations is from the events and transactions described in the financial statements, the less likely we would become aware of it. Also the risk of not detecting a material misstatement due to fraud is higher than the risk of not detecting one due to error, as fraud may involve deliberate concealment by, for example, forgery or intentional misrepresentations, or through collusion.

A further description of our responsibilities for the audit of the financial statements is located on the Financial Reporting Council's website at www.frc.org.uk/auditorsresponsibilities. This description forms part of our Report of the Auditors.

Use of our report
This report is made solely to the company's members, as a body, in accordance with Chapter 3 of Part 16 of the Companies Act 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 a Report of the Auditors 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.




Andrew Hughes FCA (Senior Statutory Auditor)
for and on behalf of Haines Watts Birmingham LLP
5-6 Greenfield Crescent
Edgbaston
Birmingham
West Midlands
B15 3BE

19 October 2023

LONETREE LIMITED (REGISTERED NUMBER: 03574622)

Income Statement
for the year ended 31 December 2022

2022 2021
Notes £ £

Turnover 65,920,743 63,891,763

Cost of sales (23,990,467 ) (21,234,367 )
Gross profit 41,930,276 42,657,396

Administrative expenses (41,560,887 ) (36,810,026 )
369,389 5,847,370

Other operating income - 214,414
Operating profit 4 369,389 6,061,784

Interest receivable and similar income 52,906 6,856
422,295 6,068,640

Interest payable and similar expenses 5 (3,811 ) (32,068 )
Profit before taxation 418,484 6,036,572

Tax on profit 6 (91,878 ) (1,374,910 )
Profit for the financial year 326,606 4,661,662

LONETREE LIMITED (REGISTERED NUMBER: 03574622)

Other Comprehensive Income
for the year ended 31 December 2022

2022 2021
Notes £ £

Profit for the year 326,606 4,661,662


Other comprehensive income - -
Total comprehensive income for the year 326,606 4,661,662

LONETREE LIMITED (REGISTERED NUMBER: 03574622)

Balance Sheet
31 December 2022

2022 2021
Notes £ £ £ £
Fixed assets
Intangible assets 9 2,139,586 2,272,241
Tangible assets 10 5,076,058 5,785,154
Investments 11 20,000 20,000
7,235,644 8,077,395

Current assets
Stocks 12 401,272 309,871
Debtors 13 1,923,671 2,200,873
Cash at bank and in hand 4,077,436 5,043,551
6,402,379 7,554,295
Creditors
Amounts falling due within one year 14 5,573,176 4,798,301
Net current assets 829,203 2,755,994
Total assets less current liabilities 8,064,847 10,833,389

Provisions for liabilities 18 550,554 465,702
Net assets 7,514,293 10,367,687

Capital and reserves
Called up share capital 19 60,000 60,000
Retained earnings 20 7,454,293 10,307,687
Shareholders' funds 7,514,293 10,367,687

The financial statements were approved by the director and authorised for issue on 18 October 2023 and were signed by:





R M Mounsey - Director


LONETREE LIMITED (REGISTERED NUMBER: 03574622)

Statement of Changes in Equity
for the year ended 31 December 2022

Called up
share Retained Total
capital earnings equity
£ £ £

Balance at 1 January 2021 60,000 6,296,025 6,356,025

Changes in equity
Dividends - (650,000 ) (650,000 )
Total comprehensive income - 4,661,662 4,661,662
Balance at 31 December 2021 60,000 10,307,687 10,367,687

Changes in equity
Dividends - (3,180,000 ) (3,180,000 )
Total comprehensive income - 326,606 326,606
Balance at 31 December 2022 60,000 7,454,293 7,514,293

LONETREE LIMITED (REGISTERED NUMBER: 03574622)

Cash Flow Statement
for the year ended 31 December 2022

2022 2021
Notes £ £
Cash flows from operating activities
Cash generated from operations 1 4,060,152 5,679,756
Interest paid (3,811 ) (32,068 )
Tax paid (1,032,850 ) (587,570 )
Net cash from operating activities 3,023,491 5,060,118

Cash flows from investing activities
Purchase of intangible fixed assets (60,000 ) (60,000 )
Purchase of tangible fixed assets (1,402,646 ) (908,610 )
Purchase of fixed asset investments (1,250 ) -
Sale of intangible fixed assets - 380,000
Sale of tangible fixed assets (74,076 ) 820,000
Sale of fixed asset investments 1,250 -
Interest received 52,906 6,856
Net cash from investing activities (1,483,816 ) 238,246

Cash flows from financing activities
Loan repayments in year (635,671 ) (2,690,454 )
Amount introduced by directors 3,180,000 650,000
Amount withdrawn by directors (1,870,119 ) (1,200,232 )
Equity dividends paid (3,180,000 ) (650,000 )
Net cash from financing activities (2,505,790 ) (3,890,686 )

(Decrease)/increase in cash and cash equivalents (966,115 ) 1,407,678
Cash and cash equivalents at beginning
of year

2

5,043,551

3,635,873

Cash and cash equivalents at end of year 2 4,077,436 5,043,551

LONETREE LIMITED (REGISTERED NUMBER: 03574622)

Notes to the Cash Flow Statement
for the year ended 31 December 2022

1. Reconciliation of profit before taxation to cash generated from operations
2022 2021
£ £
Profit before taxation 418,484 6,036,572
Depreciation charges 2,304,397 2,326,120
Loss/(profit) on disposal of fixed assets 74,076 (333,134 )
Government grants - (214,414 )
Finance costs 3,811 32,068
Finance income (52,906 ) (6,856 )
2,747,862 7,840,356
Increase in stocks (91,401 ) (16,553 )
Decrease/(increase) in trade and other debtors 188,473 (1,515,108 )
Increase/(decrease) in trade and other creditors 1,215,218 (628,939 )
Cash generated from operations 4,060,152 5,679,756

2. Cash and cash equivalents

The amounts disclosed on the Cash Flow Statement in respect of cash and cash equivalents are in respect of these Balance Sheet amounts:

Year ended 31 December 2022
31/12/22 1/1/22
£ £
Cash and cash equivalents 4,077,436 5,043,551
Year ended 31 December 2021
31/12/21 1/1/21
£ £
Cash and cash equivalents 5,043,551 3,635,873


3. Analysis of changes in net funds

At 1/1/22 Cash flow At 31/12/22
£ £ £
Net cash
Cash at bank and in hand 5,043,551 (966,115 ) 4,077,436
5,043,551 (966,115 ) 4,077,436
Debt
Debts falling due within 1 year (635,671 ) 635,671 -
(635,671 ) 635,671 -
Total 4,407,880 (330,444 ) 4,077,436

LONETREE LIMITED (REGISTERED NUMBER: 03574622)

Notes to the Financial Statements
for the year ended 31 December 2022

1. Statutory information

Lonetree Limited is a private company, limited by shares , registered in England and Wales. The company's registered number and registered office address can be found on the Company Information page.

The presentation currency of the financial statements is the Pound Sterling (£).


2. Accounting policies

Basis of preparing the financial statements
These financial statements have been prepared in accordance with Financial Reporting Standard 102 "The Financial Reporting Standard applicable in the UK and Republic of Ireland" and the Companies Act 2006. The financial statements have been prepared under the historical cost convention.

Going concern
The directors have considered the application of the going concern basis of accounting in doing so they have considered the period from the date of this report until 31 December 2024. The directors have a reasonable expectation that the company has adequate resources to continue in operational existence for the foreseeable future. Thus, they continue to adopt the going concern basis of accounting in preparing the annual financial statements.

Turnover
Turnover is measured at the fair value of the consideration received or receivable, excluding discounts, rebates, value added tax and other sales taxes.

Franchise rights & fees
Franchise rights & fees, being the amounts paid on acquisition of restaurants in 1998 and subsequently, are being written off evenly over the terms of the franchise agreements or, in the case of restaurants acquired in 2013, written off over 20 years. The 20 year write off period for the 2013 acquisitions is on the basis that, on expiry of the existing 20 year franchise agreements, the company will be granted further 20 year franchises. The franchisor operates a formal "new term process" which sets out requirements for granting of a new term and the director does not anticipate any difficulty in meeting these requirements.

Tangible fixed assets
Depreciation is provided at the following annual rates in order to write off each asset over its estimated useful life.
Short leasehold - in accordance with the property
Restaurant equipment - at varying rates on cost
Fixtures and fittings - at varying rates on cost
Motor vehicles - at varying rates on cost

Government grants
Grants are recognised at the fair value of the asset received or receivable. Grants are not recognised until there is reasonable assurance that the company will comply with the conditions attaching to them and the grants will be received.

Grants are recognised using the accrual model.

Grants relating to assets are recognised in income on a systematic basis over the expected useful life of the asset. Where part of a grant relating to an asset is deferred, it is recognised as deferred income and not deducted from the carrying amount of the asset.

Stocks
Stocks are valued at the lower of cost and net realisable value, after making due allowance for obsolete and slow moving items.

Taxation
Taxation for the year comprises current and deferred tax. Tax is recognised in the Income Statement, except to the extent that it relates to items recognised in other comprehensive income or directly in equity.

Current or deferred taxation assets and liabilities are not discounted.

Current tax is recognised at the amount of tax payable using the tax rates and laws that have been enacted or substantively enacted by the balance sheet date.

LONETREE LIMITED (REGISTERED NUMBER: 03574622)

Notes to the Financial Statements - continued
for the year ended 31 December 2022

2. Accounting policies - continued

Deferred tax
Deferred tax is recognised in respect of all timing differences that have originated but not reversed at the balance sheet date.

Timing differences arise from the inclusion of income and expenses in tax assessments in periods different from those in which they are recognised in financial statements. Deferred tax is measured using tax rates and laws that have been enacted or substantively enacted by the year end and that are expected to apply to the reversal of the timing difference.

Unrelieved tax losses and other deferred tax assets are recognised only to the extent that it is probable that they will be recovered against the reversal of deferred tax liabilities or other future taxable profits.

Hire purchase and leasing commitments
Assets obtained under hire purchase contracts or finance leases are capitalised in the balance sheet. Those held under hire purchase contracts are depreciated over their estimated useful lives. Those held under finance leases are depreciated over their estimated useful lives or the lease term, whichever is the shorter.

The interest element of these obligations is charged to profit or loss over the relevant period. The capital element of the future payments is treated as a liability.

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

Pension costs and other post-retirement benefits
The company operates a defined contribution pension scheme. Contributions payable to the company's pension scheme are charged to profit or loss in the period to which they relate.

Impairment of fixed assets
At each reporting 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 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 each 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.

Recognised impairment losses are reversed if, and only if, the reasons for the impairment loss have ceased to apply. Where an impairment loss subsequently reverses, the carrying amount of the asset (or cash-generating unit) is increased to the revised estimate of its recoverable amount, but so that the increased carrying amount does not exceed the carrying amount that would have been determined had no impairment loss been recognised for the asset (or cash-generating unit) in prior years. A reversal of an impairment loss is recognised immediately in profit or loss, unless the relevant asset is carried at a revalued amount, in which case the reversal of the impairment loss is treated as a revaluation increase.

Holiday pay accrual
A liability is recognised to the extent of any unused holiday pay entitlement which is accrued at the Balance Sheet date and carried forward to future periods. This is measured at the undiscounted cost of the future holiday entitlement so accrued at the Balance Sheet date.

LONETREE LIMITED (REGISTERED NUMBER: 03574622)

Notes to the Financial Statements - continued
for the year ended 31 December 2022

2. Accounting policies - continued

Financial instruments
The Company only enters into basic financial instruments that result in the recognition of financial assets and liabilities like trade and other debtors and creditors, loans from banks and other third parties, loans to related parties and investments in non-puttable ordinary shares.

For financial assets measured at amortised cost, the impairment cost is measured at the difference between an asset's carrying amount and the present value of estimated cash flows discounted at the assets effective interest rate. If the financial asset has a variable interest rate, the discount rate for measuring any impairment loss is the current effective interest rate determined under the contract.

For assets measured at cost less impairment, the impairment loss is measured as the difference between an asset's carrying amount and best estimate, which is an approximation of the amount that the Company would receive for the asset if it were to be sold at the balance sheet date.

Creditors

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

Finance costs

Finance costs are charged to the Profit and Loss Account 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.

Dividends

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

Judgements in applying accounting policies and key sources of estimation uncertainty

In the process of applying the company's accounting policies, management are required to make certain estimates and judgements. The key estimates and judgements are as follows:

Depreciation and residual values
The director has reviewed the asset lives and associated residual values of all fixed asset classes, and has concluded that asset lives and residual values are appropriate.

Impairment of fixed assets
A review for indicators of impairment is carried out at each reporting date, with the recoverable amount being estimated where such indicators exist. Where the carrying value exceeds the recoverable amount, the asset is impaired accordingly. Prior impairments are also reviewed for possible reversal at each reporting date.

Holiday pay accrual
A liability is recognised to the extent of any unused holiday pay entitlement which is accrued at the Balance Sheet date and carried forward to future periods. This is measured at the undiscounted cost of the future holiday entitlement so accrued at the Balance Sheet date.

3. Employees and directors
2022 2021
£ £
Wages and salaries 17,472,726 15,693,482
Social security costs 866,032 769,634
Other pension costs 256,967 202,515
18,595,725 16,665,631

LONETREE LIMITED (REGISTERED NUMBER: 03574622)

Notes to the Financial Statements - continued
for the year ended 31 December 2022

3. Employees and directors - continued

The average number of employees during the year was as follows:
2022 2021

Crew labour 1,408 1,406
Managerial staff 48 51
1,456 1,457

2022 2021
£ £
Director's remuneration 15,000 15,000
Director's pension contributions to money purchase schemes 20,000 4,000

The number of directors to whom retirement benefits were accruing was as follows:

Money purchase schemes 1 1

4. Operating profit

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

2022 2021
£ £
Other operating leases 7,034,382 6,771,769
Depreciation - owned assets 2,111,742 2,132,047
Loss/(profit) on disposal of fixed assets 74,076 (333,134 )
Franchise rights amortisation 180,280 182,448
Franchise fees amortisation 12,375 11,625
Auditors' remuneration 16,000 15,000
Taxation compliance services 4,200 4,200
Other non- audit services 25,731 11,109

5. Interest payable and similar expenses
2022 2021
£ £
Bank interest - 32,068
HMRC interest 3,811 -
3,811 32,068

LONETREE LIMITED (REGISTERED NUMBER: 03574622)

Notes to the Financial Statements - continued
for the year ended 31 December 2022

6. Taxation

Analysis of the tax charge
The tax charge on the profit for the year was as follows:
2022 2021
£ £
Current tax:
UK corporation tax 141 1,225,412
Prior year corporation tax 6,884 -
Total current tax 7,025 1,225,412

Deferred tax 84,853 149,498
Tax on profit 91,878 1,374,910

UK corporation tax has been charged at 19% (2021 - 19%).

Reconciliation of total tax charge included in profit and loss
The tax assessed for the year is higher than the standard rate of corporation tax in the UK. The difference is explained below:

2022 2021
£ £
Profit before tax 418,484 6,036,572
Profit multiplied by the standard rate of corporation tax in the UK of 19%
(2021 - 19%)

79,512

1,146,949

Effects of:
Expenses not deductible for tax purposes - 6,052
Income not taxable for tax purposes (59,924 ) -
Capital allowances in excess of depreciation (33,520 ) -
Depreciation in excess of capital allowances - 70,528
Adjustments to tax charge in respect of previous periods 6,884 -
Deferred Taxation 84,852 149,498
Profit and loss on disposal 14,074 1,883
Total tax charge 91,878 1,374,910

The Finance Act 2021 introduced an increase to the UK's main corporation tax rate to 25%, which is due to be effective from 1 April 2023.

Deferred tax has been calculated at 25% (2021 - 25%).

7. Dividends
2022 2021
£ £
Ordinary A shares of £1 each
Interim 1,590,000 325,000
Ordinary B shares of £1 each
Interim 1,590,000 325,000
3,180,000 650,000

8. Government grants

During the period the company received a total grant of £Nil (2021 - £214,414) under the Coronavirus Job Retention Scheme. This is shown in the profit and loss account under the heading other income.

LONETREE LIMITED (REGISTERED NUMBER: 03574622)

Notes to the Financial Statements - continued
for the year ended 31 December 2022

9. Intangible fixed assets
Franchise Franchise
rights fees Totals
£ £ £
Cost
At 1 January 2022 3,805,640 390,000 4,195,640
Additions - 60,000 60,000
At 31 December 2022 3,805,640 450,000 4,255,640
Amortisation
At 1 January 2022 1,713,651 209,748 1,923,399
Amortisation for year 180,280 12,375 192,655
At 31 December 2022 1,893,931 222,123 2,116,054
Net book value
At 31 December 2022 1,911,709 227,877 2,139,586
At 31 December 2021 2,091,989 180,252 2,272,241

10. Tangible fixed assets
Fixtures
Short Restaurant and Motor
leasehold equipment fittings vehicles Totals
£ £ £ £ £
Cost
At 1 January 2022 114,764 16,327,323 3,922,208 70,764 20,435,059
Additions 15,006 1,242,426 145,214 - 1,402,646
At 31 December 2022 129,770 17,569,749 4,067,422 70,764 21,837,705
Depreciation
At 1 January 2022 49,966 11,516,370 3,021,365 62,204 14,649,905
Charge for year 2,988 1,813,809 286,385 8,560 2,111,742
At 31 December 2022 52,954 13,330,179 3,307,750 70,764 16,761,647
Net book value
At 31 December 2022 76,816 4,239,570 759,672 - 5,076,058
At 31 December 2021 64,798 4,810,953 900,843 8,560 5,785,154

11. Fixed asset investments
Unlisted
investments
£
Cost
At 1 January 2022 20,000
Additions 1,250
Disposals (1,250 )
At 31 December 2022 20,000
Net book value
At 31 December 2022 20,000
At 31 December 2021 20,000

LONETREE LIMITED (REGISTERED NUMBER: 03574622)

Notes to the Financial Statements - continued
for the year ended 31 December 2022

11. Fixed asset investments - continued

Fixed asset investments consists of 20,000 (2021 - 20,000) ordinary shares of £1 each in Fries Holding Company Limited, a company registered in Guernsey. The investments are included in the accounts at cost.

12. Stocks
2022 2021
£ £
Stocks 401,272 309,871

£   £   
Food218,554153,956
Paper68,02644,530
Non-product95,67095,487
Operating supplies19,02215,898
401,272309,871

13. Debtors
2022 2021
£ £
Amounts falling due within one year:
Trade debtors 7,840 2,983
Other debtors 323,477 554,131
Other loans 128,350 113,629
Directors' current accounts - 420,956
Corporation tax 332,227 -
Prepayments 203,571 69,491
995,465 1,161,190

Amounts falling due after more than one year:
Other loans 928,206 1,039,683

Aggregate amounts 1,923,671 2,200,873

14. Creditors: amounts falling due within one year
2022 2021
£ £
Bank loans and overdrafts (see note 15) - 635,671
Trade creditors 2,013,701 1,242,108
Corporation tax - 693,598
Social security and other taxes 175,723 175,721
VAT 1,607,934 952,318
Other creditors 35,666 46,970
Directors' current accounts 888,925 -
Accrued expenses 851,227 1,051,915
5,573,176 4,798,301

LONETREE LIMITED (REGISTERED NUMBER: 03574622)

Notes to the Financial Statements - continued
for the year ended 31 December 2022

15. Loans

An analysis of the maturity of loans is given below:

2022 2021
£ £
Amounts falling due within one year or on demand:
Bank loans - 635,671

16. Leasing agreements

Minimum lease payments under non-cancellable operating leases fall due as follows:
2022 2021
£ £
Within one year 1,307,868 1,376,280
Between one and five years 5,129,995 5,455,015
In more than five years 12,581,396 14,192,867
19,019,259 21,024,162

Lease payments recognised as an expense in the year totalled £7,034,382 (2021 - £6,771,769).

The operating lease figure disclosed in land and buildings is the base rent for all the company's operating premises. Each restaurant pays its own unique base rent based on its circumstances, with the remainder of the rent being based on the performance of the restaurant.

17. Financial instruments

Financial Assets 2022 2021
£    £   
Financial assets as an equity instrument 20,000 20,000
Financial assets that are debt instruments measured at amortised cost 5,465,309 7,174,933
5,487,331 7,196,954


Financial Liabilities 3,789,519 2,976,664
3,789,519 2,976,664

18. Provisions for liabilities
2022 2021
£ £
Deferred tax 550,554 465,702

Deferred tax
£
Balance at 1 January 2022 465,702
Provided during year 84,852
Balance at 31 December 2022 550,554

LONETREE LIMITED (REGISTERED NUMBER: 03574622)

Notes to the Financial Statements - continued
for the year ended 31 December 2022

19. Called up share capital

Allotted, issued and fully paid:
Number: Class: Nominal 2022 2021
value: £ £
45,000 Ordinary A £1 45,000 45,000
15,000 Ordinary B £1 15,000 15,000
60,000 60,000

20. Reserves
Retained
earnings
£

At 1 January 2022 10,307,687
Profit for the year 326,606
Dividends (3,180,000 )
At 31 December 2022 7,454,293

21. Directors' advances, credits and guarantees

The following advances and credits to a director subsisted during the years ended 31 December 2022 and 31 December 2021:

2022 2021
£ £
R M Mounsey
Balance outstanding at start of year 420,956 (129,276 )
Amounts advanced 1,870,119 1,200,232
Amounts repaid (3,180,000 ) (650,000 )
Amounts written off - -
Amounts waived - -
Balance outstanding at end of year (888,925 ) 420,956

22. Related party disclosures

During 2021, the company sold a store to Ocean Iris Limited, a company under the control of a close family member, for total consideration of £1,200,000. As at the balance sheet date, the amount outstanding was £1,056,556 (2021- £1,153,312). This balance is unsecured and attracts an interest rate of 1.25% above Base rate. During the year, interest of £31,593 (2021 - £6,790) was received.

During the year, the company waived it's right to a retention due for payment from Ocean Iris Limited in relation to the sale of a store in 2021 totalling £74,076.

During the year, the company made sales of £28,197 (2021 - £11,116) and purchases of £9,907 (2021 - £4,766) from Ocean Iris Limited. As at the balance sheet date, a balance of £4,965 (2021 - £2,273) was due from Ocean Iris Limited.

During the year, the company paid Booey Ltd, a company under the control of a close family member, £127,400 (2021- £115,150) for bookkeeping services. At the balance sheet date, a balance of £23,521 (2021 - £11,025) was owing to Booey Ltd.

23. Ultimate controlling party

The controlling party is R M Mounsey.