Registered number:
FOR THE YEAR ENDED 31 MARCH 2024
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CATSTEPS CAFES LIMITED
COMPANY INFORMATION
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CATSTEPS CAFES LIMITED
CONTENTS
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CATSTEPS CAFES LIMITED
STRATEGIC REPORT
FOR THE YEAR ENDED 31 MARCH 2024
The directors present their Strategic Report for the year ended 31 March 2024.
The principal activity of the Company in the year under review was to operate cafés and bars under 'The Breakfast Club' brand.
The Company achieved a significantly improved performance across all major metrics making 2023-24 the most successful financial year in almost a decade. No less noteworthy has been the opening of two new company-owned sites in London’s West End as well as the launch of our long-anticipated partnership with transport hub franchise operator SSP with a commitment to three landmark transport hub sites.
In July 2023 SSP and the Company opened The Breakfast Club Gatwick Airport, unquestionably one of the most significant airport restaurants in the UK in terms of size (256 covers) and profile. In June 2024 the second franchise site opened in St Pancras International opposite the Eurotunnel terminal, with a third site to follow. The directors believe it is a testament to the strength of the brand that almost twenty years after its first site opened in 2005 a global transport hub operator is winning highly competitive site tenders in the busiest transport hubs in Britain with the Breakfast Club concept. During the year we also opened two company-owned sites in Central London with Seven Dials (November 2023) and Old Compton Street (January 2024) becoming our third and fourth West End sites. With 4 openings under 12 months this will have been the most accelerated period of growth in the history of the business and takes total locations trading under the Breakfast Club brand to 16. Turning to financial performance, restaurant EBITDA improved by 40% to £2.8m (FY23 £2.0m). Group EBITDA rose from a loss of £76k to £884k profit in FY24. Additionally, there was a £1.1m swing in operating profit from a loss in FY23 of £947k to a positive result of £155k in FY24. Gross profit and staff costs are in the best position they have been in since the Company’s inception despite the well-documented on-going inflationary cost pressures affecting the hospitality sector. The directors believe that the company’s operating efficiency is now in line with best-in-class comparable operators in the UK.
Turnover for the year was £17.8m (FY23 £18.0m) The sale of Battersea Rise and streamlining of the delivery platforms from 3 partners to 2 both contributed to this top line reduction. Like-for-like sales at existing sites were positive with double-digit growth in Central London locations.
The Directors believe the strength and longevity of the brand and significantly improved financial performance bodes well for future expansion. The directors do not propose payment of a dividend (2023: £Nil).
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CATSTEPS CAFES LIMITED
STRATEGIC REPORT (CONTINUED)
FOR THE YEAR ENDED 31 MARCH 2024
Management use a number of qualitive and quantitative indicators to monitor and improve the Company’s performance. The company considers turnover and EBITDA to be key financial indicators.
2024 2023 £ £ Turnover 17,756,753 18,018,911 EBITDA 883,997 (75,887) The board of directors assess trading performance using the measure of “Restaurant EBITDA” which is defined as earnings from restaurant operations before deduction of interest, tax, depreciation, and amortisation associated with those restaurants operations and excluding pre-opening costs of new restaurants, closing costs and any exceptional, non-recurring costs. Restaurant EBITDA for all restaurant operations during the year increased to £2.8m (2023: £2.0m). 2024 2023 £ £ Operating profit / (loss) 155,480 (947,442) Depreciation and amortisation 728,517 871,555 EBITDA 883,997 (75,887) Central costs 1,821,773 2,100,535 Pre-opening costs/closing costs 142,095 - Restaurant EBITDA 2,847,865 2,024,648
We continue to look for new site opportunities. We are looking forward to working with and opening new sites with our franchise partners SSP.
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CATSTEPS CAFES LIMITED
STRATEGIC REPORT (CONTINUED)
FOR THE YEAR ENDED 31 MARCH 2024
As with any business in the hospitality sector, the Company is vulnerable to certain risks which impact on costs and consumer confidence. The directors and management team regularly review these risks to ensure they are managed effectively.
Inflationary pressures around cost of supplies are managed through regular cost reviews and supplier negotiations. The Company believes there is limited risk due to the ongoing work with all suppliers, both old and new. Labour cost pressures through National Living Wage (NLW) increases have been successfully mitigated through improved rota management, investment in technology and training. There is little credit risk as the majority of customers pay by card at the point of sale. The company has an overdraft, bank debt and loans from related parties. Bank loans are borrowed on the SONIA + margin rate, however the Board consider the interest rate risk to be minimal.
Financial Risk Management Objectives and Policies
The Company funds its operations through the use of shareholder related loans, external bank borrowings, an overdraft facility and cash generated from day-to-day operations. The Company does not use derivative financial instruments. The main risks arising from the Company's financial instruments are interest rate risk and liquidity risk. The directors review and agree policies for managing each of these risks and they are summarised below. The policies have remained unchanged from the previous year. Interest risk The Company's borrowings attract interest rates based on the SONIA rate. Management monitor cash flows carefully to ensure that there is sufficient headroom to allow for any changes in the interest payable on these loans. Liquidity risk The Company seeks to manage financial risk by ensuring sufficient liquidity is available to meet foreseeable needs. Primarily this is achieved through close management control of working capital and utilisation of existing debt facilities which includes a formal £200k overdraft facility.
This report was approved by the board on 31 July 2024 and signed on its behalf.
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CATSTEPS CAFES LIMITED
DIRECTORS' REPORT
FOR THE YEAR ENDED 31 MARCH 2024
The directors are responsible for preparing the Strategic report, the Directors' report and the financial statements in accordance with applicable law and regulations.
In preparing these financial statements, the directors are required to:
∙select suitable accounting policies for the Company's financial statements and then apply them consistently;
∙make judgments 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.
The directors are responsible for keeping adequate accounting records that are sufficient to show and explain the Company's transactions and disclose with reasonable accuracy at any time the financial position of the Company and to enable them to ensure that the financial statements comply with the Companies Act 2006. They are also responsible for safeguarding the assets of the Company and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.
The directors who served during the year were:
The Company maintains and develops the involvement of employees through both formal and informal systems of communication and consultation. Managers have a special responsibility to communicate effectively and to promote a better understanding by employees of the activities and performance of the company.
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CATSTEPS CAFES LIMITED
DIRECTORS' REPORT (CONTINUED)
FOR THE YEAR ENDED 31 MARCH 2024
The Company will employ disabled persons when they appear to be suitable for a particular vacancy and every effort is made to ensure that they are given full and fair consideration when such vacancies arise. This includes training, career development and promotion of disabled persons and continued employment for staff that become disabled.
In accordance with section 416(4) of the Companies Act, items which are required to be disclosed in the Directors' report have been disclosed in the Strategic report as these are considered to be of strategic importance to the Company.
The auditors, Barnes Roffe LLP, will be proposed for reappointment in accordance with section 485 of the Companies Act 2006.
This report was approved by the board on
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CATSTEPS CAFES LIMITED
INDEPENDENT AUDITORS' REPORT TO THE MEMBERS OF CATSTEPS CAFES LIMITED
We have audited the financial statements of Catsteps Cafes Limited (the 'Company') for the year ended 31 March 2024, which comprise the Statement of comprehensive income, the Balance sheet, the Statement of cash flows, the Statement of changes in equity and the related notes, including a summary of significant accounting policies. The financial reporting framework that has been applied in their preparation is applicable law and United Kingdom Accounting Standards, including Financial Reporting Standard 102 ‘The Financial Reporting Standard applicable in the UK and Republic of Ireland' (United Kingdom Generally Accepted Accounting Practice).
We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and applicable law. Our responsibilities under those standards are further described in the Auditors' responsibilities for the audit of the financial statements section of our report. We are independent of the Company in accordance with the ethical requirements that are relevant to our audit of the financial statements in the United Kingdom, including the Financial Reporting Council's Ethical Standard and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
In auditing the financial statements, we have concluded that the directors' use of the going concern basis of accounting in the preparation of the financial statements is appropriate.
Based on the work we have performed, we have not identified any material uncertainties relating to events or conditions that, individually or collectively, may cast significant doubt on the Company's ability to continue as a going concern for a period of at least twelve months from when the financial statements are authorised for issue.
Our responsibilities and the responsibilities of the directors with respect to going concern are described in the relevant sections of this report.
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CATSTEPS CAFES LIMITED
INDEPENDENT AUDITORS' REPORT TO THE MEMBERS OF CATSTEPS CAFES LIMITED (CONTINUED)
The other information comprises the information included in the Annual Report other than the financial statements and our Auditors' report thereon. The directors are responsible for the other information contained within the Annual Report. Our opinion on the financial statements does not cover the other information and, except to the extent otherwise explicitly stated in our report, we do not express any form of assurance conclusion thereon. Our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the course of the audit, or otherwise appears to be materially misstated. If we identify such material inconsistencies or apparent material misstatements, we are required to determine whether this gives rise to a material misstatement in the financial statements themselves. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact.
We have nothing to report in this regard.
In our opinion, based on the work undertaken in the course of the audit:
∙the information given in the Strategic report and the Directors' report for the financial year for which the financial statements are prepared is consistent with the financial statements; and
∙the Strategic report and the Directors' report have been prepared in accordance with applicable legal requirements.
In the light of the knowledge and understanding of the Company and its environment obtained in the course of the audit, we have not identified material misstatements in the Strategic report or the Directors' report.
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CATSTEPS CAFES LIMITED
INDEPENDENT AUDITORS' REPORT TO THE MEMBERS OF CATSTEPS CAFES LIMITED (CONTINUED)
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an Auditors' report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with ISAs (UK) will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements.
Irregularities, including fraud, are instances of non-compliance with laws and regulations. We design procedures in line with our responsibilities, outlined above, to detect material misstatements in respect of irregularities, including fraud. The extent to which our procedures are capable of detecting irregularities, including fraud is detailed below:
Based on our understanding of the Company and industry, we identified that the principal risks of non compliance with laws and regulations related to food hygiene and health and safety requirements and compliance with national minimum living wage legislation. We considered the extent to which non-compliance might have a material effect on the financial statements. We also considered those laws and regulations that have a direct impact on the preparation of the financial statements such as the Companies Act 2006, income tax, payroll tax, and sales tax. We evaluated management’s incentives and opportunities for fraudulent manipulation of the financial statements (including the risk of override of controls), and determined that the principal risks were related to recognition of revenue, the posting of incorrect or inappropriate journal entries, bias in accounting estimates and disclosure of related party transactions. Procedures performed by the engagement team included: • Reconciliation of revenue to bank statement receipts recorded in the year; • Testing of the validity of bank transaction and revenue data used in the above work; • Evaluating the adequacy of systems and controls, including those designed to prevent and detect irregularities; • Identifying and testing journal adjustments both in the year and as part of the financial reporting process; • Challenging assumptions and judgements made by management in their critical accounting estimates; • Discussion of potential related party transactions with management and review of accounting records for related party activity; • Assessment of staff salaries and review of hourly pay against minimum wage legislation and consideration of requirements such as uniforms; • Review of food hygiene ratings and safety standards; and • Review of correspondence with HMRC and regulators. Because of the inherent limitations of an audit, there is a risk that we will not detect all irregularities, including those leading to a material misstatement in the financial statements or non-compliance with regulation. This risk increases the more that compliance with a law or regulation is removed from the events and transactions reflected in the financial statements, as we will be less likely to become aware of instances of non-compliance.The risk is also greater regarding irregularities occurring due to fraud rather than error, as fraud involves intentional concealment, forgery, collusion, omission or misrepresentation.
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 Auditors' report.
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CATSTEPS CAFES LIMITED
INDEPENDENT AUDITORS' REPORT TO THE MEMBERS OF CATSTEPS CAFES LIMITED (CONTINUED)
This report is made solely to the Company's members, as a body, in accordance with Chapter 3 of Part 16 of the Companies Act 2006. Our audit work has been undertaken so that we might state to the Company's members those matters we are required to state to them in an Auditors' report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the Company and the Company's members, as a body, for our audit work, for this report, or for the opinions we have formed.
for and on behalf of
Chartered Accountants
Statutory Auditor
Leytonstone House
London
E11 1GA
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CATSTEPS CAFES LIMITED
STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEAR ENDED 31 MARCH 2024
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CATSTEPS CAFES LIMITED
REGISTERED NUMBER: 08231148
BALANCE SHEET
AS AT 31 MARCH 2024
The financial statements were approved and authorised for issue by the board and were signed on its behalf on
The notes on pages 16 to 32 form part of these financial statements.
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CATSTEPS CAFES LIMITED
STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 MARCH 2024
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CATSTEPS CAFES LIMITED
STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED 31 MARCH 2024
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CATSTEPS CAFES LIMITED
STATEMENT OF CASH FLOWS (CONTINUED)
FOR THE YEAR ENDED 31 MARCH 2024
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CATSTEPS CAFES LIMITED
ANALYSIS OF NET DEBT
FOR THE YEAR ENDED 31 MARCH 2024
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CATSTEPS CAFES LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2024
Catsteps Cafes Limited ("the Company") is a private company, limited by shares, domiciled and incorporated in England. The address of the company's registered office and principal place of business is 1 Wardour Mews, London, W1F 8AH.
The principal activities of the company are included in the Director's Report.
2.Accounting policies
The financial statements have been prepared under the historical cost convention unless otherwise specified within these accounting policies and in accordance with Financial Reporting Standard 102, the Financial Reporting Standard applicable in the UK and the Republic of Ireland and the Companies Act 2006.
Monetary amounts in these financial statements are stated in pounds sterling, the functional and presentational currency of the Company, and are rounded to the nearest whole £1.
The following principal accounting policies have been applied:
In order to assess the going concern assumption, the directors have considered detailed trading and cash flow projections for a period of at least 12 months from the date of approval of these financial statements alongside the risks inherent in the business, notably liquidity and trading performance.
As disclosed in notes 16 - 18, the Company is funded by a mixture of loans from parties connected with the directors and permanent equity together with loan facilities from Santander Corporate Banking (“Santander”), the secured lender to the Company. Based on the projections, the directors are confident that they can continue to finance the company through cash generated from business activities along with the loans mentioned above and the company can achieve sustained profitability in the future. The accounts have thus been prepared under the going concern assumption.
Property rentals and other related staff costs and overheads incurred prior to a new cafe opening are written off to the profit and loss account as incurred.
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CATSTEPS CAFES LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2024
2.Accounting policies (continued)
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CATSTEPS CAFES LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2024
2.Accounting policies (continued)
Current and deferred tax is charged or credited in profit or loss, except when it relates to items charged or credited to other comprehensive income or equity, when the tax follows the transaction orevent it relates to and is also charged or credited to other comprehensive income, or equity.
Current tax assets and current tax liabilities and deferred tax assets and deferred tax liabilities are offset, if and only if, there is a legally enforceable right to set off the amounts and the entity intends either to settle on a net basis or to realise the asset and settle the liability simultaneously.
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CATSTEPS CAFES LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2024
2.Accounting policies (continued)
Goodwill
Other intangible assets
At each reporting date the company assesses whether there is any indication of impairment. If such indication exists, the recoverable amount of the asset is determined which is the higher of its fair value less costs to sell and its value in use. An impairment loss is recognised where the carrying amount exceeds the recoverable amount.
All intangible assets are considered to have a finite useful life. If a reliable estimate of the useful life cannot be made, the useful life shall not exceed ten years.
The estimated useful lives range as follows:
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CATSTEPS CAFES LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2024
2.Accounting policies (continued)
Depreciation is charged so as to allocate the cost of assets less their residual value over their estimated useful lives, using the straight-line method.
Depreciation is provided on the following basis:
The assets' residual values, useful lives and depreciation methods are reviewed, and adjusted prospectively if appropriate, or if there is an indication of a significant change since the last reporting date.
Gains and losses on disposals are determined by comparing the proceeds with the carrying amount and are recognised in profit or loss.
An assessment is made at each reporting date of whether there are indications that a fixed asset may be impaired or that an impairment loss previoulsy recognised has fully or partially reversed. Where there is any indication that an asset may be impaired, the carrying value of the asset (or cash-generating unit to which the asset has been allocated) is tested for impairment.
Shortfalls between the carrying value of fixed assets and their recoverable amounts, being the higher of their fair value less costs to sell and value-in-use, are recognised as impairment losses. All impairment losses are recognised in profit or loss. Recognised impairment losses are reversed if, and only if, the reasons for the impairment loss have ceased to apply. Reversals of impairment losses are recognised in profit or loss. On reversal of an impairment loss, the depreciation or amortisation is adjusted to allocate the asset's revised carrying amount (less any residual value) over its remaining useful life.
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CATSTEPS CAFES LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2024
2.Accounting policies (continued)
The Company only enters into basic financial instrument transactions 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 ordinary shares.
Debt instruments (other than those wholly repayable or receivable within one year), including loans and other accounts receivable and payable, are initially measured at present value of the future cash flows and subsequently at amortised cost using the effective interest method. Debt instruments that are payable or receivable within one year, typically trade debtors and creditors, are measured, initially and subsequently, at the undiscounted amount of the cash or other consideration expected to be paid or received. However, if the arrangements of a short-term instrument constitute a financing transaction, like the payment of a trade debt deferred beyond normal business terms or in case of an out-right short-term loan that is not at market rate, the financial asset or liability is measured, initially at the present value of future cash flows discounted at a market rate of interest for a similar debt instrument and subsequently at amortised cost, unless it qualifies as a loan from a director in the case of a small company, or a public benefit entity concessionary loan.
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CATSTEPS CAFES LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2024
The judgements made in the process of applying the Company's accounting policies that have the most significant effect on the accounts recognised in the financial statements, and the estimates and assumptions that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year are addressed below: Impairment of property, plant and equipment The impairment analysis of tangible assets requires an estimation of the recoverable amount of these respective assets, being the higher of fair value less costs to sell and value in use. This requires the Company to determine the value in use of the asset or cash-generating unit to which the assets are allocated. Cash generating units are deemed to be individual restaurant units. Estimation of the value in use is primarily based on discounted cash flow models which require the company to make an estimate of the expected future cash flows from the asset or the cash-generating unit and also to choose an appropriate discount rate in order to calculate the present value of the cash flows. Impairment of goodwill and other intangible assets The estimated useful economic lives of intangible assets are based on management's judgement and experience. When management identifies that actual useful economic lives differ materially from the estimates used to calculate amortisation, that charge is adjusted prospectively. Due to the significance of intangible assets arising on the acquisition of restaurants to the Company, variations between actual and estimated useful economic lives could impact operating results both positively and negatively, although historically few changes to estimated useful economic lives have been made. The annual impairment assessment in respect of goodwill requires estimates of the value in use (or fair value less costs to sell) of cash-generating units to which goodwill has been allocated. As a result, estimates of future cash flows are required, together with an appropriate discount factor for the purposes of determining the present value of those cash flows.
Analysis of turnover by country of destination:
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CATSTEPS CAFES LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2024
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CATSTEPS CAFES LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2024
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CATSTEPS CAFES LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2024
10.Taxation (continued)
There were no factors that may affect future tax charges.
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CATSTEPS CAFES LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2024
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CATSTEPS CAFES LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2024
Page 27
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CATSTEPS CAFES LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2024
Page 28
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CATSTEPS CAFES LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2024
Page 29
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CATSTEPS CAFES LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2024
Page 30
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CATSTEPS CAFES LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2024
Share premium account
Profit and loss account
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CATSTEPS CAFES LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2024
The Company operates a defined contributions pension scheme. The assets of the scheme are held separately from those of the Company in an independently administered fund. The pension cost charge represents contributions payable by the Company to the fund and amounted to £99,007 (2023: £102,159). Contributions totalling £24,307 (2023: £21,505) were payable to the fund at the balance sheet date and are included in creditors.
J Arana-Morton and A Rooney are deemed to be the controlling parties.
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