Best Experience Limited |
Registered number: |
08241338 |
Director's Report |
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The director presents his report and financial statements for the year ended 31 December 2023. |
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Principal activities |
The company's principal activity during the year continued to be the operation of a McDonalds restaurant franchise. |
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Results |
The profit for the year, after taxation, amounted to £214,762 (2022 £243,328 ) |
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Future developments |
The company continues to invest substantially in its restaurants to enhance their appearance and equipment, aiming to improve the experience for both customers and employees. |
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Financial instrument risk |
Objectives and policies |
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The company's principal financial instruments comprise cash. The main purpose of these financial instruments is to raise finance for the company's operations. The company does not enter into derivative transactions. It is, and has been throughout the period under review, the company's policy that no trading in financial instruments shall be undertaken. |
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Price risk, credit risk, liquidity risk and cash flow risk |
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The main risks arising from the company's financial instruments are interest risk and liquidity risk. The board reviews and agrees policies for managing each of these risks as summarised below:- |
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Interest rate risk - the company's exposure to market risk for changes in interest rates is limited to bank loans. Additional requirements for medium to long term debt are reviewed by the director based on the company's forecast requirements. |
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Liquidity risk - the company's objective is to maintain a balance between continuity of funding and flexibility by the utilisation of cash and bank loans. |
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Dividends |
During the year, dividends paid were £94,943 (2022 £144,280). The directors do not recommend the payment of a final dividend. |
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Directors |
The following persons served as directors during the year: |
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P A Pearson |
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Disclosure of information to auditors |
Best Experience Limited |
Strategic Report |
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The directors present their strategic report for the year ended 31 December 2023. |
Review of Business: The directors would like to highlight that, despite an improvement in turnover, significant cost pressures have resulted in a decline in margins and a much reduced operating profit. |
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Key Performance Indicators: |
2023 |
2022 |
Turnover: |
15,876,892 |
14,765,907 |
Gross Profit: |
10,346,078 |
9,546,613 |
Gross Profit %: |
65.16% |
64.65% |
Net Profit before taxation |
277,541 |
363,931 |
|
The net assets of Best Experience Ltd were £2,010,809 (2022 £1,890,990) as of the balance sheet date, indicating the company's solvency. |
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Principal Risks and Uncertainties: The management of Best Experience Ltd recognizes several principal risks that may affect the business. These risks are continuously assessed, and the company has established processes to mitigate them. The key risks include: |
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1. Economic Downturn: The business's success relies on consumer spending. Senior management closely monitors economic conditions and adjusts marketing and pricing strategies in response to mitigate this risk. |
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2. Inflation and Cost of Living Crisis: Global inflationary pressures, intensified by the war in Ukraine, pose significant risks to the company. Best Experience Ltd diligently assesses food cost inflation and wage cost inflation to mitigate potential threats. The company also ensures compliance with labour market regulations and strives to provide competitive remuneration and benefits packages to attract and retain talented employees. |
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3. Utilities Costs: Increasing volatility, cost pressures, and environmental awareness in the UK market present challenges. To manage and mitigate these risks, Best Experience Ltd has entered into Power Purchase Agreements (PPAs) for cost-effective clean energy from environmentally friendly sources. |
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4. Competition: Operating in a highly competitive market, Best Experience Ltd constantly evaluates pricing strategies and conducts thorough market research to address price sensitivities. |
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5. Liquidity Risk: Despite positive cash flows and a current asset position, the directors closely monitor liquidity and cash flow to ensure effective operational procedures and minimize risks. |
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Best Experience Limited |
Strategic Report |
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The directors acknowledge that future business development plans may be influenced by unforeseen events beyond their control and thus constantly reassess their strategies accordingly. |
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This report was approved by the board on 27th August 2024 and signed on its behalf. |
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P A Pearson |
Director |
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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 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. |
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Conclusions relating to going concern |
In auditing the financial statements, we have concluded that the directors' use of the going concern basis of accounting in the preparation of the financial statements is appropriate. |
Based on the work we have performed, we have not identified any material uncertainties relating to events or conditions that, individually or collectively, may cast significant doubt on the company's ability to continue as a going concern for a period of at least twelve months from when the financial statements are authorised for issue. |
Our responsibilities and the responsibilities of the directors with respect to going concern are described in the relevant sections of this report. |
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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. |
Comparative information in the financial statements is derived from the company's prior period financial statements which were not audited. |
We have nothing to report in this regard. |
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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 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. |
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Matters on which we are required to report by exception |
Irregularities, including fraud, are instances of non-compliance with laws and regulations. We design procedures in line with our responsibilities, outlined above, to detect material misstatements in respect of irregularities, including fraud. The extent to which our procedures are capable of detecting irregularities, including fraud is detailed below: |
We gained an understanding of the legal and regulatory framework applicable to the Company and the industry in which it operates, and considered the risk of acts by the company which were contrary to applicable laws and regulations, including fraud. These included but were not limited to compliance with Companies Act 2006, health & safety legislation and FRS102. |
We designed audit procedures to respond to the risks of material misstatement in the financial statements. |
We focussed on laws and regulations that could give rise to a material misstatement in the company financial statements. Our tests included, but were not limited to: |
Agreement of the financial statement disclosures to underlying documentation; enquiries of management, and obtaining an understanding of the control environment in monitoring compliance with laws and regulations. |
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 reflected in the financial statements, the less likely we would become aware of it. We also addressed the risk of management override of internal controls, including testing journals and evaluating whether there was evidence of bias by the director that represented a risk of material misstatement due to fraud. |
We are not responsible for preventing non-compliance and cannot be expected to detect non-compliance with all laws and regulations. |
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Motor vehicles |
over 5 years |
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Investments |
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Investments in subsidiaries, associates and joint ventures are measured at cost less any accumulated impairment losses. Listed investments are measured at fair value. Unlisted investments are measured at fair value unless the value cannot be measured reliably, in which case they are measured at cost less any accumulated impairment losses. Changes in fair value are included in the profit and loss account. |
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Cash and cash equivalents |
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Cash and cash equivalents comprise cash on hand and call deposits and other short-term highly liquid investments that are readily convertible to a known amount of cash and are subject to an insignificant risk of change in value. |
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Stocks |
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Stocks are measured at the lower of cost and estimated selling price less costs to complete and sell. Cost is determined using the first in first out method. The carrying amount of stock sold is recognised as an expense in the period in which the related revenue is recognised. |
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Debtors |
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Short term debtors are measured at transaction price (which is usually the invoice price), less any impairment losses for bad and doubtful debts. Loans and other financial assets are initially recognised at transaction price including any transaction costs and subsequently measured at amortised cost determined using the effective interest method, less any impairment losses for bad and doubtful debts. |
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Creditors |
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Short term creditors are measured at transaction price (which is usually the invoice price). Loans and other financial liabilities are initially recognised at transaction price net of any transaction costs and subsequently measured at amortised cost determined using the effective interest method. |
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Taxation |
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A current tax liability is recognised for the tax payable on the taxable profit of the current and past periods. A current tax asset is recognised in respect of a tax loss that can be carried back to recover tax paid in a previous period. Deferred tax is recognised in respect of all timing differences between the recognition of income and expenses in the financial statements and their inclusion in tax assessments. 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. Deferred tax is measured using the tax rates and laws that have been enacted or substantively enacted by the reporting date and that are expected to apply to the reversal of the timing difference, except for revalued land and investment property where the tax rate that applies to the sale of the asset is used. Current and deferred tax assets and liabilities are not discounted. |
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Provisions |
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Provisions (ie liabilities of uncertain timing or amount) are recognised when there is an obligation at the reporting date as a result of a past event, it is probable that economic benefit will be transferred to settle the obligation and the amount of the obligation can be estimated reliably. |
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Leases |
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Leases in which substantially all the risks and rewards of ownership are retained by the lessor are classified as operating leases. Payments made under operating leases are charged to profit or loss on a straight-line basis over the period of the lease. |
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Pensions |
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Contributions to defined contribution plans are expensed in the period to which they relate. |
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Dividends |
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Dividend distribution to the company's shareholders is recognised as a liability in the financial statements in the reporting period in which the dividends are declared. |
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Share capital |
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Ordinary shares are classified as equity. Equity instruments are measured at the fair value of the cash or other resources received or receivable, net of the direct costs of issuing the equity instruments. If payment is deferred and the time value of money is material, the initial measurement is on a present value basis. |
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2 |
Analysis of turnover |
2023 |
|
2022 |
£ |
£ |
|
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Sale of goods |
15,876,892 |
|
14,765,907 |
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By geographical market: |
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UK |
15,876,892 |
|
14,765,907 |
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3 |
Operating profit |
2023 |
|
2022 |
£ |
£ |
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This is stated after charging: |
|
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Depreciation of owned fixed assets |
373,179 |
|
405,099 |
|
Amortisation of goodwill |
8,311 |
|
8,311 |
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Operating lease rentals - land and buildings |
1,662,335 |
|
1,670,395 |
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Auditors' remuneration for audit services |
6,200 |
|
5,300 |
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4 |
Director's emoluments |
2023 |
|
2022 |
£ |
£ |
|
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Emoluments |
11,051 |
|
8,400 |
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Company contributions to defined contribution pension plans |
60,000 |
|
40,000 |
|
|
|
|
|
|
71,051 |
|
48,400 |
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|
|
|
|
|
|
|
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5 |
Staff costs |
2023 |
|
2022 |
£ |
£ |
|
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Wages and salaries |
4,108,336 |
|
3,650,974 |
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Social security costs |
172,216 |
|
161,925 |
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Other pension costs |
104,618 |
|
73,553 |
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|
|
|
4,385,170 |
|
3,886,452 |
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Average number of employees during the year |
Number |
Number |
|
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Employees |
419 |
|
348 |
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|
|
|
|
419 |
|
348 |
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6 |
Taxation |
2023 |
|
2022 |
£ |
£ |
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Analysis of charge in period |
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Current tax: |
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UK corporation tax on profits of the period |
114,371 |
|
67,391 |
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|
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Deferred tax: |
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Origination and reversal of timing differences |
(51,592) |
|
41,205 |
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Effect of increased tax rate on opening liability |
- |
|
12,007 |
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|
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|
|
|
(51,592) |
|
53,212 |
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|
|
|
|
|
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|
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Tax on profit on ordinary activities |
62,779 |
|
120,603 |
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Factors affecting tax charge for period |
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The differences between the tax assessed for the period and the standard rate of corporation tax are explained as follows: |
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|
2023 |
|
2022 |
£ |
£ |
|
Profit on ordinary activities before tax |
277,541 |
|
363,931 |
|
|
|
|
|
|
|
|
|
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Standard rate of corporation tax in the UK |
25% / 19% |
19% |
|
£ |
£ |
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Profit on ordinary activities multiplied by the standard rate of corporation tax |
|
65,279 |
|
69,147 |
|
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Effects of: |
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Expenses not deductible for tax purposes |
1,214 |
|
570 |
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Capital allowances for period in excess of depreciation |
47,878 |
|
(2,326) |
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Current tax charge for period |
114,371 |
|
67,391 |
|
|
|
|
|
|
|
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Factors that may affect future tax charges |
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The main rate of Corporation Tax increased to 25% from 1st April 2023 in respect of taxable profits above £250,000. In addition to the main rate there will remain a small profit rate of 19% for taxable profits below £50,000. Marginal relief will provide a gradual increase in the Corporation Tax rate between the small profits rate and the main rate. |
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Deferred tax balances must be recognised at the future rate applicable when the balance is expected to unwind. As such, deferred tax balances are recognised using the main rate of 25%. |
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7 |
Intangible fixed assets |
£ |
|
Franchise costs: |
|
|
Cost |
|
At 1 January 2023 |
166,211 |
|
At 31 December 2023 |
166,211 |
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|
|
|
|
|
|
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|
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Amortisation |
|
At 1 January 2023 |
69,738 |
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Provided during the year |
8,311 |
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At 31 December 2023 |
78,049 |
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|
|
|
|
|
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|
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Carrying amount |
|
At 31 December 2023 |
88,162 |
|
At 31 December 2022 |
96,473 |
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|
|
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|
|
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Franchise costs are being written off in equal annual instalments over its estimated economic life of 20 years. |
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8 |
Tangible fixed assets |
|
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Land and buildings |
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Plant and machinery |
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Motor vehicles |
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Total |
|
|
At cost |
|
At cost |
|
At cost |
£ |
£ |
£ |
£ |
|
Cost or valuation |
|
At 1 January 2023 |
62,669 |
|
3,505,181 |
|
51,965 |
|
3,619,815 |
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Additions |
- |
|
49,044 |
|
- |
|
49,044 |
|
At 31 December 2023 |
62,669 |
|
3,554,225 |
|
51,965 |
|
3,668,859 |
|
|
|
|
|
|
|
|
|
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Depreciation |
|
At 1 January 2023 |
27,534 |
|
1,982,148 |
|
36,375 |
|
2,046,057 |
|
Charge for the year |
3,358 |
|
359,428 |
|
10,393 |
|
373,179 |
|
At 31 December 2023 |
30,892 |
|
2,341,576 |
|
46,768 |
|
2,419,236 |
|
|
|
|
|
|
|
|
|
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Carrying amount |
|
At 31 December 2023 |
31,777 |
|
1,212,649 |
|
5,197 |
|
1,249,623 |
|
At 31 December 2022 |
35,135 |
|
1,523,033 |
|
15,590 |
|
1,573,758 |
|
|
|
|
|
|
|
|
|
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Land and Buildings above represents the cost of Stamp Duty Land Tax (SDLT) on the signing of |
|
the franchise agreements. |
|
9 |
Investments |
|
Other |
investments |
£ |
|
Cost |
|
At 1 January 2023 |
3,750 |
|
|
At 31 December 2023 |
3,750 |
|
10 |
Stocks |
2023 |
|
2022 |
£ |
£ |
|
|
Raw materials and consumables |
84,132 |
|
70,498 |
|
|
|
|
|
|
|
|
|
|
11 |
Debtors |
2023 |
|
2022 |
£ |
£ |
|
|
Trade debtors |
48,484 |
|
80,096 |
|
Other debtors |
- |
|
23,388 |
|
Prepayments and accrued income |
34,803 |
|
56,286 |
|
|
|
|
|
|
83,287 |
|
159,770 |
|
|
|
|
|
|
|
|
|
|
12 |
Cash and cash equivalents |
2023 |
|
2022 |
£ |
£ |
|
|
Cash on hand |
204,467 |
|
171,001 |
|
Cash at bank |
2,021,734 |
|
1,565,136 |
|
|
|
|
|
|
2,226,201 |
|
1,736,137 |
|
|
|
|
|
|
|
|
|
13 |
Creditors: amounts falling due within one year |
2023 |
|
2022 |
£ |
£ |
|
|
Trade creditors |
417,709 |
|
560,449 |
|
Corporation tax |
114,343 |
|
67,372 |
|
Other taxes and social security costs |
576,097 |
|
458,010 |
|
Other creditors |
143,298 |
|
575 |
|
Accruals and deferred income |
271,169 |
|
409,668 |
|
|
|
|
|
|
1,522,616 |
|
1,496,074 |
|
|
|
|
|
|
|
|
|
14 |
Deferred taxation |
2023 |
|
2022 |
£ |
£ |
|
|
Accelerated capital allowances |
201,730 |
|
253,322 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2023 |
|
2022 |
£ |
£ |
|
|
At 1 January |
253,322 |
|
200,110 |
|
(Credited)/charged to the profit and loss account |
(51,592) |
|
53,212 |
|
|
At 31 December |
201,730 |
|
253,322 |
|
|
|
|
|
|
|
|
|
|
15 |
Share capital |
Nominal |
|
2023 |
|
2023 |
|
2022 |
value |
Number |
£ |
£ |
|
Allotted, called up and fully paid: |
|
A Ordinary shares |
£1 each |
|
100 |
|
100 |
|
100 |
|
B Ordinary shares |
£1 each |
|
100 |
|
100 |
|
100 |
|
|
|
|
|
|
200 |
|
200 |
|
|
|
|
|
|
|
|
|
16 |
Profit and loss account |
2023 |
|
2022 |
£ |
£ |
|
|
At 1 January |
1,890,790 |
|
1,791,742 |
|
Profit for the financial year |
214,762 |
|
243,328 |
|
Dividends |
(94,943) |
|
(144,280) |
|
|
At 31 December |
2,010,609 |
|
1,890,790 |
|
|
|
|
|
|
|
|
|
17 |
Dividends |
2023 |
|
2022 |
£ |
£ |
|
|
Dividends on ordinary shares (note 16) |
94,943 |
|
144,280 |
|
|
|
|
|
|
|
|
|
18 |
Defined Contributions pension schemes |
|
|
The Company operates defined contributions pension schemes. The assets of the schemes are held separately from those of the Company in independently administered funds. The pension cost charge represents contributions payable by the Company to the funds and amounted to £104,618 (2022 £73,553). Contributions totalling £8,184 (2022 £3,565) were payable to the fund at the balance sheet date and are included in creditors. |
|
|
19 |
Other financial commitments |
|
|
Total future minimum lease payments under non-cancellable operating leases: |
|
|
|
|
2023 |
|
2022 |
£ |
£ |
|
Falling due: |
|
within one year |
606,252 |
|
606,252 |
|
within two to five years |
2,425,008 |
|
2,425,008 |
|
in over five years |
3,234,631 |
|
3,840,883 |
|
|
6,265,891 |
|
6,872,143 |
|
|
|
|
|
|
20 |
Related party transactions |
|
|
A company wholly owned and controlled by a shareholder act as HR consultants to the company. Charges of £140,000 were incurred during the year (2022 £120,000). |
|
21 |
Controlling party |
|
|
The company is a close company under the provisions of the taxing acts and is under the control of Mr P A Pearson. |
|
|
22 |
Legal form of entity and country of incorporation |
|
|
Best Experience Limited is a private company limited by shares and incorporated in England. |
|
23 |
Principal place of business |
|
|
The address of the company's principal place of business is: |
|
|
40 Southgate, Bath, BA1 1TG |