Company registration number 08953092 (England and Wales)
KERVAN GIDA UK LIMITED
ANNUAL REPORT AND FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
KERVAN GIDA UK LIMITED
COMPANY INFORMATION
Director
E Basar
Company number
08953092
Registered office
Swan Court
11 Worple Road
Wimbledon
London
SW19 4JS
Auditor
Gravita II LLP
Aldgate Tower
2 Leman Street
London
E1 8FA
KERVAN GIDA UK LIMITED
CONTENTS
Page
Strategic report
1 - 2
Director's report
3 - 4
Independent auditor's report
5 - 7
Income statement
8
Statement of financial position
9
Statement of changes in equity
10
Statement of cash flows
11
Notes to the financial statements
12 - 23
KERVAN GIDA UK LIMITED
STRATEGIC REPORT
FOR THE YEAR ENDED 31 DECEMBER 2023
- 1 -
The director presents the strategic report for the year ended 31 December 2023.
Review of the business
The targeted increase in sales for 2023 was achieved and with it came the improvement of overall company profitability. Gross profit margins were be maintained with focussed reduction on purchase charges helping improve gross profits. At the same time, overhead costs were regularly reviewed adding to the improved results for the year.
The move to new offices benefitted the opportunities for supporting enhanced advertising of the key brand and provided an upgraded workspace for staff. Given the cost of living crisis which impacts particularly on the end consumers, it seems that this part of the industry is more resilient as consumers continue to enjoy their small pleasures in an otherwise harsh economic environment.
We have focussed on actively supporting our customers and, looking forward enjoy regular interactions - with joint developments in the pipeline. One of the key factors of our success is the high quality of our products, resulting from many years of experience in the business. We are focussing on specific events during the next calendar year like Halloween and Easter and will be supporting these with particular product offerings. We are also planning to further strengthen our staff base and continue to take advantage of our diverse composition of employees.
We are planning to further enhance our customer base, by providing consistent and good quality of service and therefore expect another significant increase in sales and profitability in the next 12 months.
Principal risks and uncertainties
Loss of business to competitors is the key risk, particularly if we are unable to meet the demand of our customers - for example by production constraints.
To mitigate this risk, we are pre-empting future orders by regular contact and review with the customers as well as an expected order profile that is shared with the production teams. The key supplier is a parent company and has wide experience in the production side of the business. Additionally, we are also contemplating adding further group company production sites to our supplier base.
Key performance indicators
Total Sales and profit margins are the main performance indicators. The majority of products are sold at an agreed selling price, therefore increased sales will trigger higher profits, whilst we are actively managing the relevant cost bases. Price variability is mainly in relation to cost of sales, whilst other costs, like overheads, are fairly fixed in nature. All of these are regularly reviewed and outliers addressed accordingly.
The Key Performance Indicators over the last two years are as follows:
2023 2022
£000 £000
Turnover 32,765 22,380
Gross Profit 6,509 3,643
Net Profit (Loss) before tax 840 (169)
The directors believe that other variables of performance indicators are marginal and are not the best indicators of the overall performance, development and position of the company.
KERVAN GIDA UK LIMITED
STRATEGIC REPORT (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
- 2 -
Other information and explanations
Company policy on payment of creditors
The policy of the company is to agree terms of payment prior to commencing trade with a supplier and to abide by those terms on a timely submission of invoices. The main creditor is also in the same group so that the working capital need can be easily managed.
Policy on employees
The company is committed to achieving a working environment which provides equality of opportunity and freedom from unlawful discrimination on the basis of gender, sexual orientation, marital or civil partner status, gender reassignment, race, religion or belief, colour, nationality, ethnic or national origin, disability or age, pregnancy or maternity, trade union membership or the fact that they are part-time workers. The company's Equality and Diversity policy aims to remove unfair and discriminatory practices within the company and to encourage full contribution from its diverse community. The company is committed to actively opposing all forms of discrimination. The company also aims to provide a service that does not discriminate against its clients in the means by which they can access the services supplied by the company. The company believes that the directors, employees and customers are entitled to be treated with respect and dignity. The company's employment policy is to provide equal opportunity to all current and prospective employees without any discrimination. They endeavour to provide a work environment in which all individuals are treated with respect and dignity.
Social, environmental and ethical matters
The company believes that by operating in an ethical and social aware manner they will help preserve the environment; that being an integral part of efficient and profitable business management. The directors recognise that success in these areas depends on the involvement and commitment of everyone in the organisation.
Future developement
The directors expect a growth in sales in the future as the company explores new products and customers.
E Basar
Director
12 March 2024
KERVAN GIDA UK LIMITED
DIRECTOR'S REPORT
FOR THE YEAR ENDED 31 DECEMBER 2023
- 3 -
The director presents his annual report and financial statements for the year ended 31 December 2023.
Principal activities
The principal activity of the company continued to be that of wholesale of sugar and chocolate and sugar confectionery.
Results and dividends
The results for the year are set out on page 8.
No ordinary dividends were paid. The director does not recommend payment of a final dividend.
Director
The director who held office during the year and up to the date of signature of the financial statements was as follows:
E Basar
Statement of director's responsibilities
The director is responsible for preparing the annual report and the financial statements in accordance with applicable law and regulations.
Company law requires the director to prepare financial statements for each financial year. Under that law the director has elected to prepare the financial statements in accordance with International Financial Reporting Standards (IFRSs) as adopted by the United Kingdom. Under company law the director must not approve the financial statements unless he is satisfied that they give a true and fair view of the state of affairs of the company and of the profit or loss of the company for that period. In preparing these financial statements, International Accounting Standard 1 requires that directors:
properly select and apply accounting policies;
present information, including accounting policies, in a manner that provides relevant, reliable, comparable and understandable information;
provide additional disclosures when compliance with the specific requirements in IFRSs are insufficient to enable users to understand the impact of particular transactions, other events and conditions on the entity's financial position and financial performance; and
make an assessment of the company's ability to continue as a going concern.
The director is responsible for keeping adequate accounting records that are sufficient to show and explain the company’s transactions and disclose with reasonable accuracy at any time the financial position of the company and enable them to ensure that the financial statements comply with the Companies Act 2006. He is also responsible for safeguarding the assets of the company and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.
Statement of disclosure to auditor
Each director in office at the date of approval of this annual report confirms that:
so far as the director is aware, there is no relevant audit information of which the company's auditor is unaware, and
the director has taken all the steps that he / she ought to have taken as a director in order to make himself / herself aware of any relevant audit information and to establish that the company's auditor is aware of that information.
This confirmation is given and should be interpreted in accordance with the provisions of section 418 of the Companies Act 2006.
KERVAN GIDA UK LIMITED
DIRECTOR'S REPORT (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
- 4 -
On behalf of the board
E Basar
Director
12 March 2024
KERVAN GIDA UK LIMITED
INDEPENDENT AUDITOR'S REPORT
TO THE MEMBERS OF KERVAN GIDA UK LIMITED
- 5 -
Opinion
We have audited the financial statements of Kervan Gida UK Limited (the 'company') for the year ended 31 December 2023 which comprise the income statement, the statement of financial position, the statement of changes in equity, the 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 UK adopted international accounting standards.
In our opinion the financial statements:
give a true and fair view of the state of the company's affairs as at 31 December 2023 and of its profit for the year then ended;
have been properly prepared in accordance with UK adopted international accounting standards; and
have been prepared in accordance with the requirements of the Companies Act 2006.
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.
Conclusions relating to going concern
In auditing the financial statements, we have concluded that the director's use of the going concern basis of accounting in the preparation of the financial statements is appropriate.
Based on the work we have performed, we have not identified any material uncertainties relating to events or conditions that, individually or collectively, may cast significant doubt on the company's ability to continue as a going concern for a period of at least twelve months from when the financial statements are authorised for issue.
Our responsibilities and the responsibilities of the director with respect to going concern are described in the relevant sections of this report.
The other information comprises the information included in the annual report other than the financial statements and our auditor's report thereon. The director is 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 director's report for the financial year for which the financial statements are prepared is consistent with the financial statements; and
the strategic report and the director's report have been prepared in accordance with applicable legal requirements.
KERVAN GIDA UK LIMITED
INDEPENDENT AUDITOR'S REPORT (CONTINUED)
TO THE MEMBERS OF KERVAN GIDA UK LIMITED
- 6 -
Matters on which we are required to report by exception
In the light of the knowledge and understanding of the company and its environment obtained in the course of the audit, we have not identified material misstatements in the strategic report or the director's 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, or returns adequate for our audit have not been received from branches not visited by us; or
the financial statements are not in agreement with the accounting records and returns; or
certain disclosures of director's remuneration specified by law are not made; or
we have not received all the information and explanations we require for our audit.
Responsibilities of director
As explained more fully in the director's responsibilities statement, the director is responsible for the preparation of the financial statements and for being satisfied that they give a true and fair view, and for such internal control as the director determines 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 director is responsible for assessing the company's ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the director either intends to liquidate the company or to cease operations, or has no realistic alternative but to do so.
Auditor's responsibilities for the audit of the financial statements
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue 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. However, the primary responsibility for the prevention and detection of fraud rests with both those charged with governance of the entity and management.
Our approach to identifying and assessing the risks of material misstatement in respect of irregularities, including fraud and non-compliance with laws and regulations, was as follows:
the engagement partner ensured that the engagement team collectively had the appropriate competence, capabilities and skills to identify or recognise non-compliance with applicable laws and regulations;
we identified the laws and regulations applicable to the company through discussions with directors and other management, and from our commercial knowledge and experience of the industry;
we focused on specific laws and regulations which we considered may have a direct material effect on the financial statements or the operations of the company, including the Companies Act 2006 and taxation legislation;
we assessed the extent of compliance with the laws and regulations identified above through making enquiries of management, legal team and inspecting legal correspondence; and
identified laws and regulations were communicated within the audit team regularly and the team remained alert to instances of non-compliance throughout the audit.
KERVAN GIDA UK LIMITED
INDEPENDENT AUDITOR'S REPORT (CONTINUED)
TO THE MEMBERS OF KERVAN GIDA UK LIMITED
- 7 -
We assessed the susceptibility of the company’s financial statements to material misstatement, including obtaining an understanding of how fraud might occur, by:
understanding the business model as part of the control and business environment;
making enquiries of management as to where they considered there was susceptibility to fraud, their knowledge of actual, suspected and alleged fraud; and
considering the internal controls in place to mitigate risks of fraud and non-compliance with laws and regulations.
To address the risk of fraud through management bias and override of controls, we:
performed analytical procedures to identify any unusual or unexpected relationships;
tested journal entries to identify unusual transactions;
assessed whether judgements and assumptions made in determining the accounting estimates set out in note 3 were indicative of potential bias; and
investigated the rationale behind significant or unusual transactions.
In response to the risk of irregularities and non-compliance with laws and regulations, we designed procedures which included, but were not limited to:
agreeing financial statement disclosures to underlying supporting documentation;
enquiring of management as to actual and potential litigation and claims; and
reviewing correspondence with HMRC.
There are inherent limitations in our audit procedures described above. The more removed that laws and regulations are from financial transactions, the less likely it is that we would become aware of non-compliance. Auditing standards also limit the audit procedures required to identify non-compliance with laws and regulations to enquiry of the directors and other management and the inspection of regulatory and legal correspondence, if any.
Material misstatements that arise due to fraud can be harder to detect than those that arise from error as they may involve deliberate concealment by for example forgery, or intentional misrepresentation or through collusion. Our audit procedures are designed to detect material misstatement. We are not responsible for preventing non-compliance or fraud and cannot be expected to detect non-compliance with all laws and regulations.
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.
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.
Filiz Zekia FCCA (Senior Statutory Auditor)
For and on behalf of Gravita II LLP
12 March 2024
Chartered Accountants
Statutory Auditor
Aldgate Tower
2 Leman Street
London
E1 8FA
KERVAN GIDA UK LIMITED
INCOME STATEMENT
FOR THE YEAR ENDED 31 DECEMBER 2023
- 8 -
2023
2022
Notes
£
£
Revenue
2
32,765,473
22,380,262
Cost of sales
(26,256,741)
(18,737,532)
Gross profit
6,508,732
3,642,730
Other operating income
9,761
-
Distribution costs
(2,963,872)
(2,026,535)
Administrative expenses
(2,475,667)
(1,715,522)
Operating profit/(loss)
3
1,078,954
(99,327)
Finance costs
6
(239,096)
(69,767)
Profit/(loss) before taxation
839,858
(169,094)
Income tax expense
7
(89,000)
(19,100)
Profit/(loss) and total comprehensive income for the year
18
750,858
(188,194)
KERVAN GIDA UK LIMITED
STATEMENT OF FINANCIAL POSITION
AS AT
31 DECEMBER 2023
31 December 2023
- 9 -
2023
2022
Notes
£
£
Non-current assets
Goodwill
8
164,000
205,000
Intangible assets
8
165,722
Property, plant and equipment
9
1,645,554
100,528
1,809,554
471,250
Current assets
Inventories
10
7,725,672
4,521,324
Trade and other receivables
11
5,860,809
4,558,785
Cash and cash equivalents
63,076
45,790
13,649,557
9,125,899
Current liabilities
Trade and other payables
13
6,939,294
5,839,695
Current tax liabilities
89,000
Borrowings
12
4,363,042
1,602,182
Lease liabilities
14
60,354
11,451,690
7,441,877
Net current assets
2,197,867
1,684,022
Non-current liabilities
Lease liabilities
14
1,101,291
Deferred tax liabilities
15
19,100
19,100
1,120,391
19,100
Net assets
2,887,030
2,136,172
Equity
Called up share capital
17
2,660,000
2,660,000
Retained earnings
18
227,030
(523,828)
Total equity
2,887,030
2,136,172
The financial statements were approved and signed by the director and authorised for issue on 12 March 2024
E Basar
Director
Company registration number 08953092 (England and Wales)
KERVAN GIDA UK LIMITED
STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 DECEMBER 2023
- 10 -
Share capital
Retained earnings
Total
£
£
£
Balance at 1 January 2022
2,660,000
(335,634)
2,324,366
Year ended 31 December 2022:
Loss and total comprehensive income
-
(188,194)
(188,194)
Balance at 31 December 2022
2,660,000
(523,828)
2,136,172
Year ended 31 December 2023:
Profit and total comprehensive income
-
750,858
750,858
Balance at 31 December 2023
2,660,000
227,030
2,887,030
KERVAN GIDA UK LIMITED
STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED 31 DECEMBER 2023
- 11 -
2023
2022
Notes
£
£
£
£
Cash flows from operating activities
Cash (absorbed by)/generated from operations
22
(1,888,325)
440,326
Interest paid
(239,096)
(69,767)
Net cash (outflow)/inflow from operating activities
(2,127,421)
370,559
Investing activities
Purchase of intangible assets
(243,051)
Purchase of property, plant and equipment
(281,983)
(101,117)
Net cash used in investing activities
(281,983)
(344,168)
Financing activities
Proceeds from new bank loans
2,760,860
Repayment of bank loans
(40,359)
Payment of lease liabilities
(334,170)
Net cash generated from/(used in) financing activities
2,426,690
(40,359)
Net increase/(decrease) in cash and cash equivalents
17,286
(13,968)
Cash and cash equivalents at beginning of year
45,790
59,758
Cash and cash equivalents at end of year
63,076
45,790
KERVAN GIDA UK LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
- 12 -
1
Accounting policies
Company information
Kervan Gida UK Limited is a private company limited by shares incorporated in England and Wales. The registered office is Swan Court, 11 Worple Road, Wimbledon, London, SW19 4JS. The company's principal activities and nature of its operations are disclosed in the director's report.
1.1
Accounting convention
The financial statements have been prepared in accordance with International Financial Reporting Standards (IFRS) as adopted for use in the United Kingdom and with those parts of the Companies Act 2006 applicable to companies reporting under IFRS, except as otherwise stated.
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. The principal accounting policies adopted are set out below.
1.2
Going concern
The director has at the time of approving the financial statements, a reasonable expectation that the truecompany has adequate resources to continue in operational existence for the foreseeable future. Thus the director continues to adopt the going concern basis of accounting in preparing the financial statements.
1.3
Revenue
Revenue is measured based on the consideration specified in a contract with a customer and excludes amounts collected on behalf of third parties. The company recognises revenue when it transfers control of a product to a customer. Revenue is recognised at the fair value of the consideration received or receivable for goods and services provided in the normal course of business, and is shown net of VAT. The fair value of consideration takes into account trade discounts, settlement discounts and volume rebates.
Revenue from the sale of goods (confectionery products) is recognised when the significant risks and rewards of ownership of the goods have passed to the buyer (usually on dispatch of the goods), the amount of revenue can be measured reliably, it is probable that the economic benefits associated with the transaction will flow to the entity and the costs incurred or to be incurred in respect of the transaction can be measured reliably.
1.4
Goodwill
Goodwill arose from the purchase of a brand in 2018. This has been amortised over its estimated useful life of 10 years and reviewed annually for any impairment.
1.5
Intangible assets other than goodwill
Intangible assets acquired separately from a business are recognised at cost and are subsequently measured at cost less accumulated amortisation and accumulated impairment losses.
Development cost is capitalised when it meets the IFRS criteria for capitalising. This has been amortised over its estimated useful life it is reviewed annually for any impairment.
KERVAN GIDA UK LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
1
Accounting policies
(Continued)
- 13 -
1.6
Property, plant and equipment
Property, plant and equipment are initially measured at cost and subsequently measured at cost or valuation, net of depreciation and any impairment losses.
Depreciation is recognised so as to write off the cost or valuation of assets less their residual values over their useful lives on the following bases:
Leasehold land and buildings
Over the lease term
Fixtures and fittings
33% straight line
Plant and equipment
33% straight line
Motor vehicles
25% reducing balance
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 income statement.
1.7
Impairment of tangible and intangible assets
At each reporting end date, the company reviews the carrying amounts of its tangible and intangible assets to determine whether there is any indication that those assets have suffered an impairment loss. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment loss (if any). Where it is not possible to estimate the recoverable amount of an individual asset, the company estimates the recoverable amount of the cash-generating unit to which the asset belongs.
Recoverable amount is the higher of fair value less costs to sell and value in use. In assessing value in use, the estimated 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 the income statement.
1.8
Inventories
Inventories are stated at the lower of cost and estimated selling price less costs to complete and sell. Cost comprises direct materials and, where applicable, direct labour costs and those overheads that have been incurred in bringing the inventories to their present location and condition.
Inventory is valued on a first in first out basis.
Net realisable value is the estimated selling price less all estimated costs of completion and costs to be incurred in marketing, selling and distribution.
1.9
Cash and cash equivalents
Cash and cash equivalents include cash in hand, deposits held at call with banks, other short-term liquid investments with original maturities of three months or less, and bank overdrafts. Bank overdrafts are shown within borrowings in current liabilities.
1.10
Financial liabilities
The company recognises financial debt when the company becomes a party to the contractual provisions of the instruments. Financial liabilities are classified as either 'financial liabilities at fair value through profit or loss' or 'other financial liabilities'.
KERVAN GIDA UK LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
1
Accounting policies
(Continued)
- 14 -
Other financial liabilities
Other financial liabilities, including borrowings, trade payables and other short-term monetary liabilities, are initially measured at fair value net of transaction costs directly attributable to the issuance of the financial liability. They are subsequently measured at amortised cost using the effective interest method. For the purposes of each financial liability, interest expense includes initial transaction costs and any premium payable on redemption, as well as any interest or coupon payable while the liability is outstanding.
Derecognition of financial liabilities
Financial liabilities are derecognised when, and only when, the company’s obligations are discharged, cancelled, or they expire.
1.11
Taxation
The tax expense represents the sum of the tax currently payable and deferred tax.
Current tax
The tax currently payable is based on taxable profit for the year. Taxable profit differs from net profit as reported in the income statement 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 company’s liability for current tax is calculated using tax rates that have been enacted or substantively enacted by the reporting end date.
Deferred tax
Deferred tax is the tax expected to be payable or recoverable on differences between the carrying amounts of assets and liabilities in the financial statements and the corresponding tax bases used in the computation of taxable profit, and is accounted for using the balance sheet liability method. Deferred tax liabilities are generally recognised for all taxable temporary differences and deferred tax assets are recognised to the extent that it is probable that taxable profits will be available against which deductible temporary differences can be utilised. Such assets and liabilities are not recognised if the temporary 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 income statement, 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 when the company has 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.
1.12
Employee benefits
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 inventories or non-current 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.
1.13
Retirement benefits
Payments to defined contribution retirement benefit schemes are charged as an expense as they fall due.
KERVAN GIDA UK LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
1
Accounting policies
(Continued)
- 15 -
1.14
Leases
At inception, the company assesses whether a contract is, or contains, a lease within the scope of IFRS 16. A contract is, or contains, a lease if the contract conveys the right to control the use of an identified asset for a period of time in exchange for consideration. Where a tangible asset is acquired through a lease, the company recognises a right-of-use asset and a lease liability at the lease commencement date. Right-of-use assets are included within property, plant and equipment.
The right-of-use asset is initially measured at cost, which comprises the initial amount of the lease liability adjusted for any lease payments made at or before the commencement date plus any initial direct costs and an estimate of the cost of obligations to dismantle, remove, refurbish or restore the underlying asset and the site on which it is located, less any lease incentives received.
The right-of-use asset is subsequently depreciated using the straight-line method from the commencement date to the earlier of the end of the useful life of the right-of-use asset or the end of the lease term. The estimated useful lives of right-of-use assets are determined on the same basis as those of other property, plant and equipment. The right-of-use asset is periodically reduced by impairment losses, if any, and adjusted for certain remeasurements of the lease liability.
The lease liability is initially measured at the present value of the lease payments that are unpaid at the commencement date, discounted using the interest rate implicit in the lease or, if that rate cannot be readily determined, the company's incremental borrowing rate. Lease payments included in the measurement of the lease liability comprise fixed payments, variable lease payments that depend on an index or a rate, amounts expected to be payable under a residual value guarantee, and the cost of any options that the company is reasonably certain to exercise, lease payments in an optional renewal period, or penalties for early termination of a lease.
The lease liability is measured at amortised cost using the effective interest method. It is remeasured when there is a change in: future lease payments arising from a change in an index or rate; the company's estimate of the amount expected to be payable under a residual value guarantee; or the company's assessment of whether it will exercise a purchase, extension or termination option. When the lease liability is remeasured in this way, a corresponding adjustment is made to the carrying amount of the right-of-use asset, or is recorded in profit or loss if the carrying amount of the right-of-use asset has been reduced to zero.
2
Revenue
2023
2022
£
£
Revenue analysed by class of business
Sales of goods
32,765,473
22,380,262
2023
2022
£
£
Revenue analysed by geographical market
UK Sales
32,765,473
22,380,262
KERVAN GIDA UK LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
- 16 -
3
Operating profit/(loss)
2023
2022
Operating profit/(loss) for the year is stated after charging/(crediting):
£
£
Exchange losses/(gains)
38
(7,259)
Fees payable to the company's auditor for the audit of the company's financial statements
20,000
12,000
Depreciation of property, plant and equipment
232,772
42,045
Amortisation of intangible assets (included within administrative expenses)
41,000
118,329
Cost of inventories recognised as an expense
24,049,081
16,870,786
4
Employees
The average monthly number of persons (including directors) employed by the company during the year was:
2023
2022
Number
Number
Directors
1
1
Management
2
2
Operations
12
10
Total
15
13
Their aggregate remuneration comprised:
2023
2022
£
£
Wages and salaries
1,286,796
973,361
Social security costs
97,614
66,933
Pension costs
18,844
74,679
1,403,254
1,114,973
5
Director's remuneration
2023
2022
£
£
Remuneration for qualifying services
155,988
103,745
Company pension contributions to defined contribution schemes
-
50,000
155,988
153,745
KERVAN GIDA UK LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
- 17 -
6
Finance costs
2023
2022
£
£
Interest on bank overdrafts and loans
29,451
942
Other interest payable
209,645
68,825
Total interest expense
239,096
69,767
7
Income tax expense
2023
2022
£
£
Current tax
UK corporation tax on profits for the current period
89,000
Deferred tax
Origination and reversal of temporary differences
19,100
Total tax charge
89,000
19,100
The main rate of corporation tax changed on 1st April 2023 to 25% (from 19%).
The charge for the year can be reconciled to the profit/(loss) per the income statement as follows:
2023
2022
£
£
Profit/(loss) before taxation
839,858
(169,094)
Expected tax charge/(credit) based on a corporation tax rate of 23.50% (2022: 19.00%)
197,367
(32,128)
Effect of expenses not deductible in determining taxable profit
1,791
Utilisation of tax losses not previously recognised
(102,464)
Unutilised tax losses carried forward
32,128
Permanent capital allowances in excess of depreciation
(20,500)
Other non-reversing timing differences
19,100
Other movements
12,806
Taxation charge for the year
89,000
19,100
KERVAN GIDA UK LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
- 18 -
8
Intangible assets
Goodwill
Development costs
Total
£
£
£
Cost
At 1 January 2022
410,000
410,000
Additions
-
243,051
243,051
At 31 December 2022
410,000
243,051
653,051
Disposals
(243,051)
(243,051)
At 31 December 2023
410,000
410,000
Amortisation and impairment
At 1 January 2022
164,000
164,000
Charge for the year
41,000
77,329
118,329
At 31 December 2022
205,000
77,329
282,329
Charge for the year
41,000
41,000
Impairment loss
165,723
165,723
Eliminated on disposals
(243,051)
(243,051)
At 31 December 2023
246,000
246,000
Carrying amount
At 31 December 2023
164,000
-
164,000
At 31 December 2022
205,000
165,722
370,722
9
Property, plant and equipment
Leasehold land and buildings
Plant and equipment
Fixtures and fittings
Motor vehicles
Total
£
£
£
£
£
Cost
At 1 January 2022
98,530
65,134
163,664
Additions
19,222
81,895
101,117
At 31 December 2022
19,222
98,530
147,029
264,781
Additions
1,495,815
182,658
99,325
1,777,798
At 31 December 2023
1,515,037
98,530
329,687
99,325
2,042,579
KERVAN GIDA UK LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
9
Property, plant and equipment
Leasehold land and buildings
Plant and equipment
Fixtures and fittings
Motor vehicles
Total
£
£
£
£
£
(Continued)
- 19 -
Accumulated depreciation and impairment
At 1 January 2022
86,768
35,440
122,208
Charge for the year
160
11,762
30,123
42,045
At 31 December 2022
160
98,530
65,563
164,253
Charge for the year
122,201
108,351
2,220
232,772
At 31 December 2023
122,361
98,530
173,914
2,220
397,025
Carrying amount
At 31 December 2023
1,392,676
-
155,773
97,105
1,645,554
At 31 December 2022
19,062
-
81,466
-
100,528
10
Inventories
2023
2022
£
£
Finished goods
7,725,672
4,521,324
11
Trade and other receivables
2023
2022
£
£
Trade receivables
5,669,683
4,392,201
Provision for bad and doubtful debts
(54,833)
-
5,614,850
4,392,201
Other receivables
112,150
64,932
Prepayments
133,809
101,652
5,860,809
4,558,785
12
Borrowings
2023
2022
£
£
Borrowings held at amortised cost:
Bank loans
4,363,042
1,602,182
KERVAN GIDA UK LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
12
Borrowings
(Continued)
- 20 -
All loans balances are repayable within 1 year in full.
Included within the above balance is a bank loan of £2,200,000. The company's parent, Kervan Gida San ve Ticaret A.S, has provided a guarantee to the bank in support of this loan.
13
Trade and other payables
2023
2022
£
£
Trade payables
5,159,872
4,774,823
Accruals
899,352
279,861
Social security and other taxation
822,819
732,828
Other payables
57,251
52,183
6,939,294
5,839,695
14
Lease liabilities
2023
2022
Maturity analysis
£
£
Within one year
60,354
-
In two to five years
280,128
-
In over five years
821,163
-
Total undiscounted liabilities
1,161,645
-
Lease liabilities are classified based on the amounts that are expected to be settled within the next 12 months and after more than 12 months from the reporting date, as follows:
2023
2022
£
£
Current liabilities
60,354
Non-current liabilities
1,101,291
1,161,645
-
KERVAN GIDA UK LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
- 21 -
15
Deferred taxation
The following are the major deferred tax liabilities and assets recognised by the company and movements thereon during the current and prior reporting period.
Fixed asset timing differences
£
Balance at 1 January 2022
-
Deferred tax movements in prior year
Charge/(credit) to profit or loss
19,100
Liability at 1 January 2023 and 31 December 2023
19,100
16
Retirement benefit schemes
2023
2022
Defined contribution schemes
£
£
Charge to profit or loss in respect of defined contribution schemes
18,844
74,679
The company operates a defined contribution pension scheme for all qualifying employees. The assets of the scheme are held separately from those of the company in an independently administered fund.
17
Share capital
2023
2022
2023
2022
Ordinary share capital
Number
Number
£
£
Issued and fully paid
Ordinary Shares of £1 each
2,660,000
2,660,000
2,660,000
2,660,000
There is a single class of Ordinary shares. There are no restrictions on the distribution of dividends and repayment of capital.
18
Retained earnings
Retained earnings represents accumulated comprehensive income for the year and prior periods less dividends paid.
19
Capital risk management
The company manages its capital to ensure that it will be able to continue as a going concern while maximising the return to stakeholders through the optimisation of the debt and equity balance,
The company is not subject to any externally imposed capital requirements.
KERVAN GIDA UK LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
- 22 -
20
Related party transactions
Remuneration of key management personnel
The remuneration of key management personnel, including directors, is set out below in aggregate for each of the categories specified in IAS 24 Related Party Disclosures.
2023
2022
£
£
Short-term employee benefits
155,988
153,745
Other transactions with related parties
During the year the company entered into the following transactions with related parties:
Sale of goods
Purchase of goods
2023
2022
2023
2022
£
£
£
£
Parent company
83,503
11,773
Other related parties
1,648,449
452,255
28,103,487
15,236,464
1,731,952
452,255
28,115,260
15,236,464
Recharges
2023
2022
£
£
Other related parties
8,385
-
The following amounts were outstanding at the reporting end date:
2023
2022
Amounts due to related parties
£
£
Parent company
1,170
Other related parties
4,724,984
2,167,237
4,726,154
2,167,237
The following amounts were outstanding at the reporting end date:
2023
2022
Amounts due from related parties
£
£
Parent company
39,918
-
Other related parties
156,516
-
196,434
-
KERVAN GIDA UK LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
- 23 -
21
Controlling party
The parent company is Kervan Gida San ve Ticaret A.S, a company incorporated in Turkey.
22
Cash (absorbed by)/generated from operations
2023
2022
£
£
Profit/(loss) for the year before income tax
839,857
(169,094)
Adjustments for:
Finance costs
239,096
69,767
Amortisation and impairment of intangible assets
206,723
118,329
Depreciation and impairment of property, plant and equipment
232,772
42,045
Movements in working capital:
Increase in inventories
(3,204,348)
(138,076)
Increase in trade and other receivables
(1,302,024)
(1,445,406)
Increase in trade and other payables
1,099,599
1,962,761
Cash (absorbed by)/generated from operations
(1,888,325)
440,326
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