The directors present the strategic report for the period ended 24 December 2023.
The directors considered the group results for the period to be satisfactory given the global economic issues faced. Kefco Sales Limited, the trading company, increased sales and returned to profitability before taxation in the financial period despite the macro-economic effects causing increased cost of sales.
The management of the business and operation of the group's strategy are subject to a number of risks. The key business risks and uncertainties affecting the group is the competition for other national retailers in the locality combined with the effect of the current economic climate on its customer base.
The directors have reviewed the impact Brexit may have on the group's activities and identified that the only potential risk is that associated with its ability to maintain an adequate workforce.
The current global conflicts are having an impact on the cost and supply of goods and energy. The group is seeking to reduce risk with increased prices charged for their sales where possible to compensate for increased cost of supplied goods. Energy is currently being bought at a spot rate each month whilst the prices are volatile and future priced purchases where necessary.
The group has loans on floating interest rates and is aware of increasing interest lending rates and is regularly monitoring the movements with a view to taking action to fix the rate should this be considered appropriate.
The directors have considered the continuing impact of the coronavirus on the business and consider that no future considerations are necessary.
The company received rates relief under the Retail, Hospitality and Leisure Relief scheme as follows:
April 2022 to March 2023 £109,695
April 2023 to March 2024 £109,424
The group has not made use of any further government initiatives to help businesses.
The directors consider the financial key performance indicators to be turnover, gross profit margin, profit on ordinary activities before taxation and earnings before interest, tax, depreciation and amortisation (EBITDA).
Turnover has increased in the period to £45,413,075 (2022: £44,297,791)
The gross profit margin has increased to 9.23% (2022: 8.09%)
EBITDA has increased to £2,410,720 (2022: £1,736,470)
Kefco Group Limited monitors a range of non financial performance indicators within the trading company Kefco Sales Limited enabling comparatives to be provided. These include the Food Hygiene Ratings and Restaurant Operations Compliance Checks (ROCC).
For the period ended 24th December 2023:
95% of the stores had a food hygiene rating of 5 (out of 5) (2022: 95%)
69% achieved the highest ROCC score of ‘at standard’ (2022: 71%)
The company is planning to continue to invest in assets to promote further sales growth by providing customers with new products and restaurants.
This section describes how the directors have had regard to the matters set out in section 172(1)(a) to (f) Companies Act 2006 in exercising their duty to promote the success of the Company for the benefit of its members as a whole and in doing so have regard (amongst other matters) to
• the likely consequence of any decision in the long term
• the interests of the company’s employees
• the need to foster the company’s business relationships with suppliers, customers and others
• the impact of the company’s operations on the community and the environment
• the desirability of the company maintaining a reputation for high standards of business conduct
• the need to act fairly between members of the company.
Decision making
Kefco Sales Limited which was incorporated in 1972, has been run by the same families since 1997. The group continually invests in its existing restaurants with new equipment, décor and employee training to ensure that they are welcoming for its customers for now and in the long term. We also consider carefully when and where new restaurant sites are to be located to ensure they will sustain the long term investment we make in them.
Our stakeholders
Employees
Kefco recognises that the key to a successful business is well trained, reliable, motivated and informed management team and employees. All staff are trained in accordance with KFC’s requirements and additional training where necessary to satisfy health and safety and food safety standards. Kefco also have an active apprenticeship scheme along with opportunities to obtain a recognised degree. Suitable and interested employees share equal opportunities for further training and career development. Employees are informed on a regular basis of current activities, progress and general matters of interest by various methods, including regular management meetings and operation meetings. Any employee feedback is passed to the senior management and onto the directors through this regular discussion.
Various employee bonus schemes within the group based on performance on a number of measures also assist with engaging the employees with the performance of the group.
The recent change in control of the group was verbally communicated to managers who then advise the employees reporting to them. Similar methods were used to communicate other messages allowing for employees to feed back any questions and concerns.
Other stakeholders
Customer focus is an important side of the business. Compliance to service targets are set and measured as part of the strategic planning to ensure a high level of service to our customers is maintained. Through KFC, our customers can engage with our customer service team and we also obtain feedback from customers on the service received through an online survey offered with each purchase. Social media is also monitored and responded to.
As a franchisee of KFC, the group’s main suppliers are selected by KFC with who the relationship is maintained. Kefco aims to assist with all its suppliers by ensuring prompt payment of invoices in line with agreed terms and to quickly resolve any disputes that may arise. Of the suppliers not selected by KFC, the directors will usually have arranged the contracts and are the point of contact enabling the maintenance and building on of a long-term relationship and understanding of both companies’ operational needs.
Impact on the community and environment
The group is committed to reducing the environmental impact of our operation. We ensure used oil is collected, recycled and used as biofuel. Food waste is also separated, collected and used to create energy. Where available, excess cooked food is passed to local charities to distribute. The group also seeks out energy saving initiatives within its restaurants to reduce emissions as well as costs.
For several years, Kefco Sales Limited have partnered with local councils through the “Cleaner Essex” initiative in an effort to reduce litter and recently and more recently with The Great British Spring Clean. This has also included employees organising and taking part in litter picks away from the areas of their regular litter picks surrounding their restaurants.
The desirability of the group maintaining a reputation for high standards of business conduct
Kefco prides itself as being a group that maintains high standards of ethical conduct.
The group, through its franchisors own modern slavery policy, manages to manage the risks and prevent slavery and human trafficking being part of the supply chain. Internally, we contract with suppliers who have their own modern slavery statement and expect them to be maintained. Smaller contractors, not required to maintain a modern slavery statement remain a challenge to monitor although they tend to have fewer staff and our close involvement with them provides a degree of acceptability on who they employ. We monitor the right to work of our employees and ensuring they receive their own pay through various procedures and, with our close senior management involvement at store level, are familiar with the staff who we employ.
The risk of bribery is considered very low within the group. Only the senior management team of the group enter into contracts with suppliers, all of whom are aware of their responsibilities in the prevention of bribery and the group has a zero tolerance towards it. The financial director has a final overview by overseeing all outward payments.
As a close company, all shareholders are appointed directors and aware of the day to day running of the business including the operational and financial transactions.
By order of the board
The directors present their annual report and financial statements for the period ended 24 December 2023.
The results for the period are set out on page 11.
The directors have not recommended a dividend for this period.
The directors who held office during the period and up to the date of signature of the financial statements were as follows:
The group manages its cash and borrowing requirements in order to maximise interest income and minimise interest expense, whilst ensuring the company has sufficient liquid resources to meet the operating needs of the business.
The company is exposed to cash flow interest rate risk on floating rate deposits, bank overdrafts and loans.
Investments of cash surpluses and borrowings are made through our bank.
Within the bounds of commercial confidentiality, information is disseminated to all members of staff in the group about matters that affect the progress of the group and are of interest and concern to them as employees.
Members of the management team regularly visit restaurants and discuss matters of current interest and concern to the business with staff. In addition, regular staff meetings within restaurants and at the head office are held where discussion is encouraged. The group encourages the development of employees through training which also opens up promotion prospects. To enable this, the group has invested in employees through the provision of training courses up to degree level to meet the interest shown.
Details of our engagement with customers and suppliers can be found in our S172 statement.
The auditor, Rickard Luckin Limited, is deemed to be reappointed under section 487(2) of the Companies Act 2006.
Streamlined Energy and Carbon Reporting (SECR)
The group companies operations impact mainly on the greenhouse gas emission through the use of energy to produce our products served in and from our restaurants include cooking, refrigeration and air conditioning. This includes the use of electricity and gas. The group also generates greenhouse gases through the use of travel within the business.
During the year the group’s CO2 emissions totalled 1,676 tonnes (2022: 1,642 tonnes), the electricity consumption amounted to 5,941 MWh (2022: 6,148 MWh), gas consumption amounted to 1,662 MWh (2022: 1,703 MWh) and travel amounted to 145 MWh (2022: 136 MWh).
The method used to obtain this information was from meter readings and travel data, converted into CO2 emissions via approved calculations.
Energy usage in the cooking process will be affected by sales whereas energy used in air conditioning of the restaurants will be affected by the outside temperature and other weather aspects. Another electric vehicle was added to the fleet in 2023.
The group has measured the CO2e for each customer transaction and for each £1 of sales. The results for 2023 are as follows:
Intensity Measure 2023 2022
CO2e per transaction 0.443 0.413 Kg of CO2e produced per sales transaction
CO2e per £1 of Turnover 0.037 0.037 Kg of CO2e produced per £1 of sales
Whilst the company is conscious of its effect on the environment, it has not set any targets to work towards at present but is implementing energy saving initiatives when suitable.
We have audited the financial statements of Kefco Group Limited (the 'parent company') and its subsidiaries (the 'group') for the period ended 24 December 2023 which comprise the group statement of comprehensive income, the group balance sheet, the company balance sheet, the group statement of changes in equity, the company statement of changes in equity, the group statement of cash flows and notes to the financial statements, including 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).
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 Auditor's responsibilities for the audit of the financial statements section of our report. We are independent of the group and parent 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 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 group's and parent company’s ability to continue as a going concern for a period of at least twelve months from when the financial statements are authorised for issue.
Our responsibilities and the responsibilities of the directors with respect to going concern are described in the relevant sections of this report.
Other information
The other information comprises the information included in the annual report other than the financial statements and our auditor's 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.
Opinions on other matters prescribed by the Companies Act 2006
In our opinion, based on the work undertaken in the course of our audit:
the information given in the strategic report and the directors' report for the financial period 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 group and the parent company and their environment obtained in the course of the audit, we have not identified material misstatements in the strategic report or the directors' report.
We have nothing to report in respect of the following matters in relation to which the Companies Act 2006 requires us to report to you if, in our opinion:
adequate accounting records have not been kept by the parent company, or returns adequate for our audit have not been received from branches not visited by us; or
the parent company financial statements are not in agreement with the accounting records and returns; or
certain disclosures of directors' remuneration specified by law are not made; or
we have not received all the information and explanations we require for our audit.
As explained more fully in the directors' responsibilities statement, the directors are responsible for the preparation of the financial statements and for being satisfied that they give a true and fair view, and for such internal control as the directors determine is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error. In preparing the financial statements, the directors are responsible for assessing the parent company's ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the directors either intend to liquidate the parent company or to cease operations, or have no realistic alternative but to do so.
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor's report that includes our opinion. Reasonable assurance is a high level of assurance but is not a guarantee that an audit conducted in accordance with ISAs (UK) will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements.
Irregularities, including fraud, are instances of non-compliance with laws and regulations. We design procedures in line with our responsibilities, outlined above, to detect material misstatements in respect of irregularities, including fraud. The extent to which our procedures are capable of detecting irregularities, including fraud, is detailed below.
We identified areas of laws and regulations that could reasonably be expected to have a material effect on the financial statements from our: general commercial and sector experience; through verbal and written communications with those charged with governance and other management and via inspection of the group’s regulatory and legal correspondence.
We discussed with those charged with governance and other management the policies and procedures regarding compliance with laws and regulations.
We communicated identified laws and regulations to our team and remained alert to any indicators of non-compliance throughout the audit, we also specifically considered where and how fraud may occur within the group.
The potential effect of these laws and regulations on the financial statements varies considerably.
Firstly, the group is subject to laws and regulations that directly affect the financial statements, including: the company’s constitution; relevant financial reporting standards; company law; tax legislation and distributable profits legislation and we assess the extent of compliance with these laws and regulations as part of our procedures on the related financial statement items.
Secondly the group is subject to many other laws and regulations where the consequences of non-compliance could have a material effect on the amounts or disclosures in the financial statements, for instance through the imposition of fines and penalties, or through losses arising from litigations. We identified the following areas as those most likely to have such an affect: employment legislation; health and safety legislation; data protection legislation; anti-bribery and corruption legislation.
International Auditing Standards (UK) limit the required procedures to identify non-compliance with these laws and regulations, and no procedures over and above those already noted are required. These limited procedures did not identify any actual or suspected non-compliance with laws and regulations that could have a material impact on the financial statements.
In relation to fraud, we performed the following specific procedures in addition to those already noted:
Challenging assumptions made by management in its significant accounting estimates in particular: Depreciation of tangible fixed assets and amortisation of intangible fixed assets;
Identifying and testing journal entries, in particular any entries posted with unusual nominal ledger account combinations, journal entries crediting cash or any revenue account, journal entries posted by senior management and consolidation journals;
Performing analytical procedures to identify unexpected movements in account balances which may be indicative of fraud;
Ensuring that testing undertaken on both the performance statement, and the Balance Sheet includes a number of items selected on a random basis;
These procedures did not identify any actual or suspected fraudulent irregularity that could have a material impact on the financial statements.
Owing to the inherent limitations of an audit, there is an unavoidable risk that we may not have detected some material misstatements in the financial statements, even though we have properly planned and performed our audit in accordance with ISAs (UK). For example, the further removed non-compliance with laws and regulations is from the events and transactions reflected in the financial statements, the less likely the procedures that we are required to undertake would identify it. In addition, as with any audit, there remains a high risk of non-detection of irregularities, as these might involve collusion, forgery, intentional omissions, misrepresentation, or the override of internal controls. We are not responsible for preventing non-compliance with laws and regulations or fraud, and cannot be expected to detect non-compliance with all laws and regulations or every incidence of fraud.
A further description of our responsibilities is available on the Financial Reporting Council’s website at: https://www.frc.org.uk/auditorsresponsibilities. This description forms part of our auditor's report.
Use of our report
This report is made solely to the company’s 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 auditor's report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the company and the company’s members as a body, for our audit work, for this report, or for the opinions we have formed.
As permitted by s408 Companies Act 2006, the company has not presented its own profit and loss account and related notes. The company’s loss for the year was £613,377 (2022 - £504,092 loss).
These financial statements have been prepared in accordance with the provisions relating to larger-sized companies.
Kefco Group Limited (“the company”) is a private limited company domiciled and incorporated in England and Wales. The registered office is First Floor, Kefco House, Rochford Business Park, Cherry Orchard Way, Rochford, Essex, SS4 1GP.
The group consists of Kefco Group Limited and all of its subsidiaries.
The accounting reference date is 24 December. The company prepares its management accounts on a 4 weekly basis and these annual accounts are made up to 24 December 2023.
The financial statements are prepared for the reporting period 26 December 2022 to 24 December 2023.
These financial statements have been prepared in accordance with FRS 102 “The Financial Reporting Standard applicable in the UK and Republic of Ireland” (“FRS 102”) and the requirements of the Companies Act 2006.
The financial statements are prepared in sterling, which is the functional currency of the company. Monetary amounts in these financial statements are rounded to the nearest £.
The financial statements have been prepared under the historical cost convention, modified to include the revaluation of freehold properties. The principal accounting policies adopted are set out below.
The company is a qualifying entity for the purposes of FRS 102, being the ultimate parent of a group which prepares publicly available consolidated financial statements, including this company, which are intended to give a true and fair view of the assets, liabilities, financial position and profit or loss of the group. The company has therefore taken advantage of exemptions from the disclosure requirements for parent company information presented within the consolidated financial statements of Section 7 ‘Statement of Cash Flows’: Presentation of a statement of cash flow and related notes and disclosures.
The consolidated group financial statements consist of the financial statements of the parent company Kefco Group Limited together with all entities controlled by the parent company (its subsidiaries).
All financial statements are made up to 24 December 2023. Where necessary, adjustments are made to the financial statements of subsidiaries to bring the accounting policies used into line with those used by other members of the group.
All intra-group transactions, balances and unrealised gains on transactions between group companies are eliminated on consolidation. Unrealised losses are also eliminated unless the transaction provides evidence of an impairment of the asset transferred.
Subsidiaries are consolidated in the group’s financial statements from the date that control commences until the date that control ceases.
At the time of approving the financial statements, the directors have a reasonable expectation that the group has adequate resources to continue in operational existence for the foreseeable future. Thus the directors continue to adopt the going concern basis of accounting in preparing the financial statements.
Whilst the group balance sheet shows a net current liability position, the directors have considered the timing of cash inflows and are satisfied that funds will be available to meet liabilities as they arise.
Turnover shown in the profit or loss represents gross receipts from restaurant activities in the United Kingdom during the period, excluding value added tax, and is recognised upon receipt of goods by the customer.
The gain or loss arising on the disposal of an asset is determined as the difference between the sale proceeds and the carrying value of the asset, and is recognised in the profit and loss account.
Equity investments are measured at fair value through profit or loss.
In the parent company financial statements, investments in subsidiaries, associates and jointly controlled entities are initially measured at cost and subsequently measured at cost less any accumulated impairment losses.
A subsidiary is an entity controlled by the group. Control is the power to govern the financial and operating policies of the entity so as to obtain benefits from its activities.
At each reporting period end date, the group 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.
The carrying amount of the investments accounted for using the equity method is tested for impairment as a single asset. Any goodwill included in the carrying amount of the investment is not tested separately for impairment.
Recoverable amount is the higher of fair value less costs to sell and value in use. In assessing value in use, the estimated future 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 the 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.
The group has elected to apply the provisions of Section 11 ‘Basic Financial Instruments’ and Section 12 ‘Other Financial Instruments Issues’ of FRS 102 to all of its financial instruments.
Financial instruments are recognised in the group's balance sheet when the group becomes party to the contractual provisions of the instrument.
Financial assets and liabilities are offset and the net amounts presented in the financial statements when there is a legally enforceable right to set off the recognised amounts and there is an intention to settle on a net basis or to realise the asset and settle the liability simultaneously.
Basic financial assets, which include debtors and cash and bank balances, are initially measured at transaction price including transaction costs and are subsequently carried at amortised cost using the effective interest method unless the arrangement constitutes a financing transaction, where the transaction is measured at the present value of the future receipts discounted at a market rate of interest. Financial assets classified as receivable within one year are not amortised.
Financial assets, other than those held at fair value through profit and loss, are assessed for indicators of impairment at each reporting end date.
Financial assets are impaired where there is objective evidence that, as a result of one or more events that occurred after the initial recognition of the financial asset, the estimated future cash flows have been affected. If an asset is impaired, the impairment loss is the difference between the carrying amount and the present value of the estimated cash flows discounted at the asset’s original effective interest rate. The impairment loss is recognised in profit or loss.
If there is a decrease in the impairment loss arising from an event occurring after the impairment was recognised, the impairment is reversed. The reversal is such that the current carrying amount does not exceed what the carrying amount would have been, had the impairment not previously been recognised. The impairment reversal is recognised in profit or loss.
Financial assets are derecognised only when the contractual rights to the cash flows from the asset expire or are settled, or when the group transfers the financial asset and substantially all the risks and rewards of ownership to another entity, or if some significant risks and rewards of ownership are retained but control of the asset has transferred to another party that is able to sell the asset in its entirety to an unrelated third party.
Financial liabilities and equity instruments are classified according to the substance of the contractual arrangements entered into. An equity instrument is any contract that evidences a residual interest in the assets of the group after deducting all of its liabilities.
Basic financial liabilities, including creditors, bank loans, loans from fellow group companies and preference shares that are classified as debt, are initially recognised at transaction price unless the arrangement constitutes a financing transaction, where the debt instrument is measured at the present value of the future payments discounted at a market rate of interest. Financial liabilities classified as payable within one year are not amortised.
Debt instruments are subsequently carried at amortised cost, using the effective interest rate method.
Trade creditors are obligations to pay for goods or services that have been acquired in the ordinary course of business from suppliers. Amounts payable are classified as current liabilities if payment is due within one year or less. If not, they are presented as non-current liabilities. Trade creditors are recognised initially at transaction price and subsequently measured at amortised cost using the effective interest method.
Financial liabilities are derecognised when the group's contractual obligations expire or are discharged or cancelled.
Equity instruments issued by the group are recorded at the proceeds received, net of transaction costs. Dividends payable on equity instruments are recognised as liabilities once they are no longer at the discretion of the group.
The tax expense represents the sum of the tax currently payable and deferred tax.
The tax currently payable is based on taxable profit for the year. Taxable profit differs from net profit as reported in the profit and loss account because it excludes items of income or expense that are taxable or deductible in other years and it further excludes items that are never taxable or deductible. The group’s liability for current tax is calculated using tax rates that have been enacted or substantively enacted by the reporting end date.
Deferred tax liabilities are generally recognised for all timing differences and deferred tax assets are recognised to the extent that it is probable that they will be recovered against the reversal of deferred tax liabilities or other future taxable profits. Such assets and liabilities are not recognised if the timing difference arises from goodwill or from the initial recognition of other assets and liabilities in a transaction that affects neither the tax profit nor the accounting profit.
The carrying amount of deferred tax assets is reviewed at each reporting end date and reduced to the extent that it is no longer probable that sufficient taxable profits will be available to allow all or part of the asset to be recovered. Deferred tax is calculated at the tax rates that are expected to apply in the period when the liability is settled or the asset is realised. Deferred tax is charged or credited in the profit and loss account, except when it relates to items charged or credited directly to equity, in which case the deferred tax is also dealt with in equity. Deferred tax assets and liabilities are offset if, and only if, there is a legally enforceable right to offset current tax assets and liabilities and the deferred tax assets and liabilities relate to taxes levied by the same tax authority.
The costs of short-term employee benefits are recognised as a liability and an expense, unless those costs are required to be recognised as part of the cost of stock or fixed assets.
The cost of any unused holiday entitlement is recognised in the period in which the employee’s services are received.
Termination benefits are recognised immediately as an expense when the company is demonstrably committed to terminate the employment of an employee or to provide termination benefits.
The group operates a defined contribution pension scheme for certain employees. The assets of the scheme are held separately from those of the group in independent and separate trustee administered funds. The annual contributions payable are charged to the group profit or loss and outstanding contributions are included on the group balance sheet.
Rentals payable under operating leases, including any lease incentives received, are charged to profit or loss on a straight line basis over the term of the relevant lease except where another more systematic basis is more representative of the time pattern in which economic benefits from the leased asset are consumed.
In the application of the group’s accounting policies, the directors are required to make judgements, estimates and assumptions about the carrying amount of assets and liabilities that are not readily apparent from other sources. The estimates and associated assumptions are based on historical experience and other factors that are considered to be relevant. Actual results may differ from these estimates.
The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised where the revision affects only that period, or in the period of the revision and future periods where the revision affects both current and future periods.
The estimates and assumptions which have a significant risk of causing a material adjustment to the carrying amount of assets and liabilities are as follows.
Tangible fixed assets are depreciated over their expected useful economic life. There is a certain level of judgement and estimation over this life and this impacts the carrying value of these assets. The depreciation charge is recognised within administrative expenses.
Intangible fixed assets are amortised over their expected useful economic life. There is a certain level of judgement and estimation over this life and this impacts the carrying value of these assets. The amortisation charge is recognised within administrative expenses.
The average monthly number of persons (including directors) employed by the group and company during the period was:
Their aggregate remuneration comprised:
The actual charge for the period can be reconciled to the expected credit for the period based on the profit or loss and the standard rate of tax as follows:
Included in goodwill are costs totalling £2,540,725 which arose as a result of a subsidiary purchasing trade and assets from KFC (GB) Limited. It is being amortised over 10 years. The net carrying value at the balance sheet date was £1,475,125.
Included in negative goodwill are costs totalling £3,276,233 which arose on acquisition of the J&J Restaurants Ltd and its subsidiaries in the period. It is being amortised over the life of the franchises the negative goodwill is apportioned to. The net carrying value at the balance sheet date was £2,017,136.
Details of the company's subsidiaries at 24 December 2023 are as follows:
The bank loans and overdrafts are secured by a fixed and floating charge over the undertaking and all the property and assets, future and present. It is subject to a cross guarantee between all group companies to HSBC Bank Plc.
Included in bank loans is £8,877,144 of which £5,645,712 is due in 2-5 years and £1,820,004 is due in over five years. The bank loan is repayable in monthly instalments to March 2030 with interest charged at 2.5% above SONIA.
Included in debenture loans are two debenture loans which are repayable in 2026 and 2028 with a respective unsecured interest rate of 4% and 5% respectively.
The following are the major deferred tax liabilities and assets recognised by the group and company, and movements thereon:
A defined contribution pension scheme is operated for all qualifying employees. The assets of the scheme are held separately from those of the group in an independently administered fund.
At the reporting end date the group had outstanding commitments for future minimum lease payments under non-cancellable operating leases, which fall due as follows:
The Company has taken advantage of the exemption conferred by section 33 of FRS 102 "Related party disclosures" not to disclose transactions with wholly owned members of the group headed by Kefco Group Limited.