REGISTERED NUMBER: |
ADAM BUCHANAN SMITH LIMITED |
Strategic Report, Report of the Director and |
Financial Statements for the Year Ended 31 March 2023 |
REGISTERED NUMBER: |
ADAM BUCHANAN SMITH LIMITED |
Strategic Report, Report of the Director and |
Financial Statements for the Year Ended 31 March 2023 |
ADAM BUCHANAN SMITH LIMITED (REGISTERED NUMBER: SC387609) |
Contents of the Financial Statements |
for the year ended 31 March 2023 |
Page |
Company Information | 1 |
Strategic Report | 2 | to | 3 |
Report of the Director | 4 | to | 5 |
Report of the Independent Auditors | 6 | to | 7 |
Income Statement | 8 |
Other Comprehensive Income | 9 |
Balance Sheet | 10 |
Statement of Changes in Equity | 11 |
Cash Flow Statement | 12 |
Notes to the Cash Flow Statement | 13 |
Notes to the Financial Statements | 14 | to | 22 |
ADAM BUCHANAN SMITH LIMITED |
Company Information |
for the year ended 31 March 2023 |
Director: |
Secretary: |
Registered office: |
Registered number: |
Auditors: |
Statutory Auditor |
CUBO Birmingham |
Office 401, 4th Floor |
Birmingham |
West Midlands |
B3 3AX |
ADAM BUCHANAN SMITH LIMITED (REGISTERED NUMBER: SC387609) |
Strategic Report |
for the year ended 31 March 2023 |
The director presents his strategic report for the year ended 31 March 2023. |
Review of business |
The company currently operates four stores throughout Scotland employing over 450 members of staff. |
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 company is in a net current liabilities position at the balance sheet date, however this is a reflection of the nature of the fast food industry. |
Despite the net current liabilities position, and a fall in net assets from £1.39 million in 2022 to £600k, the strength of the business remains strong and the directors consider the company to have adequate resources to meet liabilities as they fall due. |
Key performance indicators |
Sales for the year amounted to £15.81 million, an increase of £1.41 million from 2022, giving an overall sales increase of approximately 9.79%. The growth in sales is predominantly due to a full year of trade from a restaurant purchased during 2022 and growth in delivery sales within our existing restaurants. |
The gross profit margin is 61.66%, compared to 67.73% in 2022, and is in line with expectations. |
Future developments |
2023 and 2024 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). |
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 to boost sales through Deliveroo, and the further optimisation of our delivery operations. |
The company has purchased two new stores since the year end, store 1489, Aberdeen KittyBrewester for £1.15 million and store 1341, Aberdeen Asda for £450,000, both on 1 July 2023. |
ADAM BUCHANAN SMITH LIMITED (REGISTERED NUMBER: SC387609) |
Strategic Report |
for the year ended 31 March 2023 |
Principal risks and uncertainties |
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. |
On behalf of the board: |
ADAM BUCHANAN SMITH LIMITED (REGISTERED NUMBER: SC387609) |
Report of the Director |
for the year ended 31 March 2023 |
The director presents his report with the financial statements of the company for the year ended 31 March 2023. |
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 have been paid as follows: |
A Ordinary Shares: £10,000 per share on 31 March 2023 totalling £90,000. |
B Ordinary Shares: £60,000 per share on 31 March 2023 totalling £60,000. |
The total distribution of dividends for the year ended 31 March 2023 will be £150,000. |
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. |
Events since the end of the year |
Information relating to events since the end of the year is given in the notes to the financial statements. |
Director |
Going concern |
The company is in a net current liabilities position at the balance sheet date, however this is a reflection of the nature of the fast food industry and not a reflection of the strength of the business. |
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 March 2025. The directors have a reasonable expectation, for the foreseeable future, that the company has adequate resources to continue in operational existence and meet liabilities as they fall due for payment despite being in a net current liabilities position at the balance sheet date. 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. |
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 employment of disabled employees. |
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), including Financial Reporting Standard 102 'The Financial Reporting Standard applicable in the UK and Republic of Ireland'. 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; |
- | prepare the financial statements on the going concern basis unless it is inappropriate to presume that the company will continue in business. |
ADAM BUCHANAN SMITH LIMITED (REGISTERED NUMBER: SC387609) |
Report of the Director |
for the year ended 31 March 2023 |
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, Cooper Parry Group Limited, were appointed during the year and are deemed re-appointed under Section 487(2) of the Companies Act 2006. |
On behalf of the board: |
Report of the Independent Auditors to the Members of |
Adam Buchanan Smith Limited |
Opinion |
We have audited the financial statements of Adam Buchanan Smith Limited (the 'company') for the year ended 31 March 2023 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 March 2023 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 |
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 |
Adam Buchanan Smith Limited |
Responsibilities of director |
As explained more fully in the Statement of Director's Responsibilities set out on pages four and five, 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. |
Other matter |
As this was a first year audit, the comparative figures for 2022 were unaudited. |
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. |
for and on behalf of |
Statutory Auditor |
CUBO Birmingham |
Office 401, 4th Floor |
Birmingham |
West Midlands |
B3 3AX |
ADAM BUCHANAN SMITH LIMITED (REGISTERED NUMBER: SC387609) |
Income Statement |
for the year ended 31 March 2023 |
2023 | 2022 |
Notes | £ | £ |
Turnover |
Cost of sales | ( |
) | ( |
) |
Gross profit |
Administrative expenses | ( |
) | ( |
) |
(411,735 | ) | 666,178 |
Other operating income |
Operating (loss)/profit | 4 | ( |
) |
Interest payable and similar expenses | 5 | ( |
) | ( |
) |
(Loss)/profit before taxation | ( |
) |
Tax on (loss)/profit | 6 | ( |
) | ( |
) |
(Loss)/profit for the financial year | ( |
) |
ADAM BUCHANAN SMITH LIMITED (REGISTERED NUMBER: SC387609) |
Other Comprehensive Income |
for the year ended 31 March 2023 |
2023 | 2022 |
Notes | £ | £ |
(Loss)/profit for the year | ( |
) |
Other comprehensive income | - | - |
Total comprehensive (loss)/income for the year |
( |
) |
ADAM BUCHANAN SMITH LIMITED (REGISTERED NUMBER: SC387609) |
Balance Sheet |
31 March 2023 |
2023 | 2022 |
Notes | £ | £ | £ | £ |
Fixed assets |
Intangible assets | 9 |
Tangible assets | 10 |
Investments | 11 |
Current assets |
Stocks | 12 |
Debtors | 13 |
Cash at bank and in hand |
Creditors |
Amounts falling due within one year | 14 |
Net current (liabilities)/assets | ( |
) |
Total assets less current liabilities |
Creditors |
Amounts falling due after more than one year |
15 |
( |
) |
( |
) |
Provisions for liabilities | 19 | ( |
) | ( |
) |
Net assets |
Capital and reserves |
Called up share capital | 20 |
Retained earnings | 21 |
Shareholders' funds |
The financial statements were approved by the director and authorised for issue on |
ADAM BUCHANAN SMITH LIMITED (REGISTERED NUMBER: SC387609) |
Statement of Changes in Equity |
for the year ended 31 March 2023 |
Called up |
share | Retained | Total |
capital | earnings | equity |
£ | £ | £ |
Balance at 1 April 2021 |
Changes in equity |
Dividends | - | ( |
) | ( |
) |
Total comprehensive income | - |
Balance at 31 March 2022 |
Changes in equity |
Dividends | - | ( |
) | ( |
) |
Total comprehensive loss | - | ( |
) | ( |
) |
Balance at 31 March 2023 |
ADAM BUCHANAN SMITH LIMITED (REGISTERED NUMBER: SC387609) |
Cash Flow Statement |
for the year ended 31 March 2023 |
2023 | 2022 |
Notes | £ | £ |
Cash flows from operating activities |
Cash generated from operations | 1 |
Interest paid | ( |
) | ( |
) |
Tax paid | ( |
) | ( |
) |
Net cash from operating activities |
Cash flows from investing activities |
Purchase of intangible fixed assets | ( |
) |
Purchase of tangible fixed assets | ( |
) | ( |
) |
Purchase of fixed asset investments | (1,250 | ) | - |
Net cash from investing activities | ( |
) | ( |
) |
Cash flows from financing activities |
New loans in year |
Loan repayments in year | ( |
) | ( |
) |
Amount introduced by directors | 150,000 | 140,259 |
Amount withdrawn by directors | (118,689 | ) | (171,277 | ) |
Equity dividends paid | ( |
) | ( |
) |
Net cash from financing activities | ( |
) |
Decrease in cash and cash equivalents | ( |
) | ( |
) |
Cash and cash equivalents at beginning of year |
2 |
1,046,837 |
Cash and cash equivalents at end of year | 2 | 400,655 | 1,038,010 |
ADAM BUCHANAN SMITH LIMITED (REGISTERED NUMBER: SC387609) |
Notes to the Cash Flow Statement |
for the year ended 31 March 2023 |
1. | Reconciliation of (loss)/profit before taxation to cash generated from operations |
2023 | 2022 |
£ | £ |
(Loss)/profit before taxation | ( |
) |
Depreciation charges |
Finance costs | 72,318 | 26,897 |
140,206 | 1,160,258 |
Increase in stocks | ( |
) | ( |
) |
Decrease/(increase) in trade and other debtors | ( |
) |
Increase/(decrease) in trade and other creditors | ( |
) |
Cash generated from operations |
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 March 2023 |
31/3/23 | 1/4/22 |
£ | £ |
Cash and cash equivalents | 400,655 | 1,038,010 |
Year ended 31 March 2022 |
31/3/22 | 1/4/21 |
£ | £ |
Cash and cash equivalents | 1,038,010 | 1,046,837 |
3. | Analysis of changes in net debt |
At 1/4/22 | Cash flow | At 31/3/23 |
£ | £ | £ |
Net cash |
Cash at bank and in hand | 1,038,010 | (637,355 | ) | 400,655 |
1,038,010 | ( |
) | 400,655 |
Debt |
Debts falling due within 1 year | (532,688 | ) | (9,305 | ) | (541,993 | ) |
Debts falling due after 1 year | (1,802,398 | ) | 555,971 | (1,246,427 | ) |
(2,335,086 | ) | 546,666 | (1,788,420 | ) |
Total | (1,297,076 | ) | (90,689 | ) | (1,387,765 | ) |
ADAM BUCHANAN SMITH LIMITED (REGISTERED NUMBER: SC387609) |
Notes to the Financial Statements |
for the year ended 31 March 2023 |
1. | Statutory information |
Adam Buchanan Smith Limited is a |
The presentation currency of the financial statements is the Pound Sterling (£). |
2. | Accounting policies |
Basis of preparing the financial statements |
Going concern |
The company is in a net current liabilities position at the balance sheet date, however this is a reflection of the nature of the fast food industry and not a reflection of the strength of the business. |
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 March 2025. The directors have a reasonable expectation, for the foreseeable future, that the company has adequate resources to continue in operational existence and meet liabilities as they fall due for payment despite being in a net current liabilities position at the balance sheet date. 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 and fees |
Franchise rights and fees, being the amounts paid on acquisition of restaurants are being written off evenly over the terms of the franchise agreements . |
Tangible fixed assets |
Land and buildings | - |
Restaurant equipment | - |
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. |
ADAM BUCHANAN SMITH LIMITED (REGISTERED NUMBER: SC387609) |
Notes to the Financial Statements - continued |
for the year ended 31 March 2023 |
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 |
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. |
ADAM BUCHANAN SMITH LIMITED (REGISTERED NUMBER: SC387609) |
Notes to the Financial Statements - continued |
for the year ended 31 March 2023 |
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 |
2023 | 2022 |
£ | £ |
Wages and salaries |
Social security costs |
Other pension costs |
ADAM BUCHANAN SMITH LIMITED (REGISTERED NUMBER: SC387609) |
Notes to the Financial Statements - continued |
for the year ended 31 March 2023 |
3. | Employees and directors - continued |
The average number of employees during the year was as follows: |
2023 | 2022 |
Crew labour | 411 | 361 |
Management labour | 21 | 19 |
2023 | 2022 |
£ | £ |
Director's remuneration |
The number of directors to whom retirement benefits were accruing was as follows: |
Money purchase schemes |
4. | Operating (loss)/profit |
The operating loss (2022 - operating profit) is stated after charging: |
2023 | 2022 |
£ | £ |
Other operating leases |
Depreciation - owned assets |
Franchise Rights amortisation |
Franchise Fees amortisation |
Auditors' remuneration |
Other non- audit services |
5. | Interest payable and similar expenses |
2023 | 2022 |
£ | £ |
Bank interest |
6. | Taxation |
Analysis of the tax charge |
The tax charge on the loss for the year was as follows: |
2023 | 2022 |
£ | £ |
Current tax: |
UK corporation tax | ( |
) |
Deferred tax |
Tax on (loss)/profit |
UK corporation tax has been charged at 19% (2022 - 19%). |
ADAM BUCHANAN SMITH LIMITED (REGISTERED NUMBER: SC387609) |
Notes to the Financial Statements - continued |
for the year ended 31 March 2023 |
6. | Taxation - continued |
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: |
2023 | 2022 |
£ | £ |
(Loss)/profit before tax | ( |
) |
(Loss)/profit multiplied by the standard rate of corporation tax in the UK of |
( |
) |
Effects of: |
Expenses not deductible for tax purposes |
Capital allowances in excess of depreciation | - | ( |
) |
Depreciation in excess of capital allowances | - |
Utilisation of tax losses |
Deferred tax provision | 154,465 | 174,062 |
Total tax charge | 154,465 | 108,760 |
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% (2022 - 19%). |
7. | Dividends |
2023 | 2022 |
£ | £ |
Ordinary A shares of £1 each |
Interim - ordinary shares |
Ordinary B share of £1 |
Interim |
8. | Government grants |
During the period the company received a total grant of £nil (2022 - £42,150) under the Coronavirus Job Retention Scheme. This is shown in the profit and loss account under the heading other income. |
9. | Intangible fixed assets |
Franchise | Franchise |
Rights | Fees | Totals |
£ | £ | £ |
Cost |
At 1 April 2022 |
and 31 March 2023 |
Amortisation |
At 1 April 2022 |
Amortisation for year |
At 31 March 2023 |
Net book value |
At 31 March 2023 |
At 31 March 2022 |
ADAM BUCHANAN SMITH LIMITED (REGISTERED NUMBER: SC387609) |
Notes to the Financial Statements - continued |
for the year ended 31 March 2023 |
10. | Tangible fixed assets |
Land and | Restaurant |
buildings | equipment | Totals |
£ | £ | £ |
Cost |
At 1 April 2022 |
Additions |
At 31 March 2023 |
Depreciation |
At 1 April 2022 |
Charge for year |
At 31 March 2023 |
Net book value |
At 31 March 2023 |
At 31 March 2022 |
11. | Fixed asset investments |
Unlisted |
investments |
£ |
Cost |
At 1 April 2022 |
Additions |
At 31 March 2023 |
Net book value |
At 31 March 2023 |
At 31 March 2022 |
Fixed asset investments consists of 5,000 (2022 - 3,750) 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 |
2023 | 2022 |
£ | £ |
Stocks |
Analysis of stock | 2023 | 2022 |
£ | £ |
Food | 51,582 | 47,952 |
Paper | 17,452 | 16,969 |
Non-product & Promo stocks | 7,970 | 6,153 |
77,004 | 71,074 |
ADAM BUCHANAN SMITH LIMITED (REGISTERED NUMBER: SC387609) |
Notes to the Financial Statements - continued |
for the year ended 31 March 2023 |
13. | Debtors |
2023 | 2022 |
£ | £ |
Amounts falling due within one year: |
Other debtors |
Directors' current accounts | - | 29,840 |
Corporation tax |
Prepayments |
Amounts falling due after more than one year: |
Prepayments |
Aggregate amounts |
14. | Creditors: amounts falling due within one year |
2023 | 2022 |
£ | £ |
Bank loans and overdrafts (see note 16) |
Trade creditors |
Social security and other taxes |
VAT | 451,008 | 6,969 |
Other creditors |
Directors' current accounts | 1,471 | - |
Accrued expenses |
15. | Creditors: amounts falling due after more than one year |
2023 | 2022 |
£ | £ |
Bank loans (see note 16) |
16. | Loans |
An analysis of the maturity of loans is given below: |
2023 | 2022 |
£ | £ |
Amounts falling due within one year or on demand: |
Bank loans |
Amounts falling due between one and two years: |
Bank loans - 1-2 years |
Amounts falling due between two and five years: |
Bank loans - 2-5 years |
Amounts falling due in more than five years: |
Repayable by instalments |
Bank loans more 5 yr by instal | 117,857 | 56,970 |
ADAM BUCHANAN SMITH LIMITED (REGISTERED NUMBER: SC387609) |
Notes to the Financial Statements - continued |
for the year ended 31 March 2023 |
16. | Loans - continued |
The loans are due for repayment in equal monthly instalments with terms as stated above. They are unsecured with interest charged from 1.4% to 1.45% above the Bank of England base rate. |
17. | Leasing agreements |
Minimum lease payments under non-cancellable operating leases fall due as follows: |
2023 | 2022 |
£ | £ |
Within one year |
Between one and five years |
In more than five years |
Lease payments recognised as an expense in the year totalled £1,613,805 (2022 - £1,773,523). |
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. |
18. | Financial instruments |
Financial Assets | 2023 | 2022 |
£ | £ |
Financial assets as an equity instrument | 5,000 | 3,750 |
Financial assets that are debt instruments measured at amortised cost | 460,039 | 1,133,152 |
465,039 | 1,136,902 |
Financial Liabilities | 2,393,445 | 2,441,852 |
2,393,445 | 2,441,852 |
19. | Provisions for liabilities |
2023 | 2022 |
£ | £ |
Deferred tax | 282,101 | 127,636 |
Deferred tax |
£ |
Balance at 1 April 2022 |
Provided during year |
Balance at 31 March 2023 |
20. | Called up share capital |
Allotted, issued and fully paid: |
Number: | Class: | Nominal | 2023 | 2022 |
value: | £ | £ |
Ordinary A | £1 | 9 | 9 |
Ordinary B | £1 | 1 | 1 |
10 | 10 |
ADAM BUCHANAN SMITH LIMITED (REGISTERED NUMBER: SC387609) |
Notes to the Financial Statements - continued |
for the year ended 31 March 2023 |
21. | Reserves |
Retained |
earnings |
£ |
At 1 April 2022 |
Deficit for the year | ( |
) |
Dividends | ( |
) |
At 31 March 2023 |
22. | Related party disclosures |
During the year, total dividends of £90,000 (2022 - £51,500) were paid to the director . |
As at the balance sheet date, the balance owed to the director from the company amounted to £1,471 (2022 - £29,841 owed to the company). |
During the year, dividends paid to a related party amounted to £60,000. (2022 - £31,500) |
23. | Post balance sheet events |
The company purchased two stores in July 2023. Stores 1341 and 1489, both in Aberdeen were purchased for £450,000 and £1.15 million respectively. |
24. | Ultimate controlling party |
The controlling party is G A E Buchanan-Smith. |