Company registration number 05612486 (England and Wales)
GASTRONOMY FOODS UK LIMITED
ANNUAL REPORT AND FINANCIAL STATEMENTS
FOR THE YEAR ENDED 24 DECEMBER 2023
GASTRONOMY FOODS UK LIMITED
COMPANY INFORMATION
Directors
Mr A Khan
Mr S Muhammad
Mr R D Smith
Mr P Khan
Secretary
Mr A Khan
Company number
05612486
Registered office
1st Floor, KFC
Earls Park, Arlington Way
Battlefield Road
Shrewsbury
Shropshire
England
SY1 4AB
Auditor
Hammond McNulty LLP
Bank House
Market Square
Congleton
Cheshire
United Kingdom
CW12 1ET
GASTRONOMY FOODS UK LIMITED
CONTENTS
Page
Strategic report
1
Directors' report
2 - 3
Independent auditor's report
4 - 6
Profit and loss account
7
Statement of comprehensive income
8
Balance sheet
9
Statement of changes in equity
10
Notes to the financial statements
11 - 24
GASTRONOMY FOODS UK LIMITED
STRATEGIC REPORT
FOR THE YEAR ENDED 24 DECEMBER 2023
- 1 -
The directors present the strategic report for the year ended 24 December 2023.
Review of the business
Turnover has decreased by 5% during the year driven with the higher ticket spend YOY and the strong marketing calendar. Trade across the company has been consistent and we have started observing the pre-covid trends across our group and one system, although the margins are still not as pre-covid level due to inflation impacting the whole QSR industry. Foot falls are coming to normal and delivery channel is still very strong representing 28%.
Principal risks and uncertainties
The principal risks and uncertainties to which the business is susceptible are market conditions and pricing. The company has developed appropriate methods to identify, manage and mitigate these risks where it is possible to do so. Financial risk has been reduced by putting the appropriate insurance cover in place for the key men. Debt Service ratio has been improved year on year. The operation risk and the compensation policies against these activities are evaluated to discourage unnecessary or excessive risk taking. The annual incentive target setting process is closely linked to the annual financial planning process and supports the Company's overall strategic plan.
Development and performance
Overall business is in very good shape to open more restaurants in coming years. We have been upgrading all our restaurants to the current brand standard with respect to design and addition of equipment to accommodate more product lines. We are recruiting more and more people in the local community to accommodate the requirements of future back vision of having 60 + outlets as a group.
Key performance indicators
The company's principal activities during the year continued to be the same as a fast-food franchisee (KFC). The key financial and other performance indicators during the year were as follows:
2023
2022
2021
£'000
£'000
£'000
Turnover
17,853
16,993
17,957
Operating profit
690
(235)
451
Profit before tax
261
(412)
334
Equity shareholders funds
885
761
1,275
No of KFC outlets
10
12
12
Profit before Depn & amortisation
1,331
349
1,187
Average number of employees
333
449
430
Mr A Khan
Director
21 September 2024
GASTRONOMY FOODS UK LIMITED
DIRECTORS' REPORT
FOR THE YEAR ENDED 24 DECEMBER 2023
- 2 -
The directors present their annual report and financial statements for the year ended 24 December 2023.
Principal activities
The principal activity of the company continued to be that of a KFC franchise.
Results and dividends
The results for the year are set out on page 7.
Ordinary dividends were paid amounting to £181,356. The directors do not recommend payment of a further dividend.
Directors
The directors who held office during the year and up to the date of signature of the financial statements were as follows:
Mr A Khan
Mr S Muhammad
Mr R D Smith
Mr P Khan
Disabled persons
Applications for employment by disabled persons are always fully considered, bearing in mind the aptitudes of the applicant concerned. In the event of members of staff becoming disabled, every effort is made to ensure that their employment within the company continues and that the appropriate training is arranged. It is the policy of the company that the training, career development and promotion of disabled persons should, as far as possible, be identical to that of other employees.
Employee involvement
The company's policy is to consult and discuss with employees, through unions, staff councils and at meetings, matters likely to affect employees' interests.
Information about matters of concern to employees is given through information bulletins and reports which seek to achieve a common awareness on the part of all employees of the financial and economic factors affecting the company's performance.
There is no employee share scheme at present, but the directors are considering the introduction of such a scheme as a means of further encouraging the involvement of employees in the company's performance.
Statement of directors' responsibilities
The directors are responsible for preparing the annual report and the financial statements in accordance with applicable law and regulations.
Company law requires the directors to prepare financial statements for each financial year. Under that law the directors have elected to prepare the financial statements in accordance with United Kingdom Generally Accepted Accounting Practice (United Kingdom Accounting Standards and applicable law). Under company law the directors must not approve the financial statements unless they are satisfied that they give a true and fair view of the state of affairs of the company and of the profit or loss of the company for that period. In preparing these financial statements, the directors are required to:
select suitable accounting policies and then apply them consistently;
make judgements and accounting estimates that are reasonable and prudent;
prepare the financial statements on the going concern basis unless it is inappropriate to presume that the company will continue in business.
The directors are responsible for keeping adequate accounting records that are sufficient to show and explain the company’s transactions and disclose with reasonable accuracy at any time the financial position of the company and enable them to ensure that the financial statements comply with the Companies Act 2006. They are also responsible for safeguarding the assets of the company and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.
GASTRONOMY FOODS UK LIMITED
DIRECTORS' REPORT (CONTINUED)
FOR THE YEAR ENDED 24 DECEMBER 2023
- 3 -
Strategic report
The company has chosen in accordance with Companies Act 2006, s. 414C(11) to set out in the company's strategic report information required by Large and Medium-sized Companies and Groups (Accounts and Reports) Regulations 2008, Sch. 7 to be contained in the directors' report.
Statement of disclosure to auditor
So far as each person who was a director at the date of approving this report is aware, there is no relevant audit information of which the company’s auditor is unaware. Additionally, the directors individually have taken all the necessary steps that they ought to have taken as directors in order to make themselves aware of all relevant audit information and to establish that the company’s auditor is aware of that information.
Medium-sized companies exemption
This report has been prepared in accordance with the provisions applicable to companies entitled to the medium-sized companies exemption.
On behalf of the board
Mr A Khan
Director
21 September 2024
GASTRONOMY FOODS UK LIMITED
INDEPENDENT AUDITOR'S REPORT
TO THE MEMBERS OF GASTRONOMY FOODS UK LIMITED
- 4 -
Opinion
We have audited the financial statements of Gastronomy Foods UK Limited (the 'company') for the year ended 24 December 2023 which comprise the profit and loss account, the statement of comprehensive income, the balance sheet, the statement of changes in equity 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).
In our opinion the financial statements:
give a true and fair view of the state of the company's affairs as at 24 December 2023 and of its profit for the year then ended;
have been properly prepared in accordance with United Kingdom Generally Accepted Accounting Practice; and
have been prepared in accordance with the requirements of the Companies Act 2006.
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.
Material uncertainty related to going concern
We draw you attention to note 1.2 in the financial statements, which indicates that the group, which contains LARS GFUK Holdings Limited, Gastronomy Foods UK Limited and Gastronomy Restaurants Limited breached a number of covenants during the year end 24 December 2023. As stated in note 1.2, the breach of the covenants indicate that a material uncertainty exists that may cast doubt on the company’s ability to continue as a going concern. Our opinion is not modified in respect of this matter.
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.
Our responsibilities and the responsibilities of the directors 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 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 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.
GASTRONOMY FOODS UK LIMITED
INDEPENDENT AUDITOR'S REPORT
TO THE MEMBERS OF GASTRONOMY FOODS UK LIMITED (CONTINUED)
- 5 -
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 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, 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 remuneration specified by law are not made; or
we have not received all the information and explanations we require for our audit.
Responsibilities of directors
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 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 company or to cease operations, or have 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.
The extent to which our procedures are capable of detecting irregularities, including fraud, is detailed below.
We obtained an understanding of laws and regulations that affect the company, focusing on those that had a direct effect on the financial statements or that had a fundamental effect on its operations. Key laws and regulations that we identified included the UK Companies Act, tax legislation, and employment legislation.
We enquired of the directors, reviewed correspondence with HMRC and reviewed legal fees for evidence of non-compliance with relevant laws and regulations. We also reviewed controls the directors have in place to ensure compliance.
We gained an understanding of the controls that the directors have in place to prevent and detect fraud. We enquired of the directors about any incidences of fraud that had taken place during the accounting period.
The risk of fraud and non-compliance with laws and regulations and fraud was discussed within the audit team and tests were planned and performed to address these risks. We identified the potential for fraud in the following areas: misappropriation of sales during the cut off period, understatement of costs, potential for management override and related party transactions
We reviewed financial statements disclosures and tested to supporting documentation to assess compliance with relevant laws and regulations discussed above.
GASTRONOMY FOODS UK LIMITED
INDEPENDENT AUDITOR'S REPORT
TO THE MEMBERS OF GASTRONOMY FOODS UK LIMITED (CONTINUED)
- 6 -
We enquired of the directors about actual and potential litigation and claims.
We performed analytical procedures at the planning stage to identify any unusual or unexpected relationships that might indicate risks of material misstatement due to fraud.
In addressing the risk of fraud due to management override of internal controls we tested the appropriateness of journal entries and assessed whether the judgements made in making accounting estimates were indicative of a potential bias.
Due 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 auditing standards. For example, as with any audit, there remained a higher risk of non-detection of irregularities, as these may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal controls. We are not responsible for preventing fraud or non-compliance laws and regulations and cannot be expected to detect all fraud and non-compliance with laws and regulations.
A further description of our responsibilities for the audit of the financial statements is located on the Financial Reporting Council's website at www.frc.org.uk/auditorsresponsibilities. This description forms part of our Report of the Auditors.
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.
Marie Ann Shenton FCCA
Senior Statutory Auditor
For and on behalf of Hammond McNulty LLP
23 September 2024
Chartered Certified Accountants
Statutory Auditor
Bank House
Market Square
Congleton
Cheshire
United Kingdom
CW12 1ET
GASTRONOMY FOODS UK LIMITED
PROFIT AND LOSS ACCOUNT
FOR THE YEAR ENDED 24 DECEMBER 2023
- 7 -
2023
2022
Notes
£
£
Turnover
3
17,853,376
16,993,758
Cost of sales
(12,021,001)
(12,866,721)
Gross profit
5,832,375
4,127,037
Administrative expenses
(5,265,333)
(5,054,646)
Other operating income
100,000
691,767
Operating profit/(loss)
7
667,042
(235,842)
Interest payable and similar expenses
8
(429,253)
(176,966)
Profit/(loss) before taxation
237,789
(412,808)
Tax on profit/(loss)
9
117,654
70,758
Profit/(loss) for the financial year
355,443
(342,050)
The profit and loss account has been prepared on the basis that all operations are continuing operations.
GASTRONOMY FOODS UK LIMITED
STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEAR ENDED 24 DECEMBER 2023
- 8 -
2023
2022
£
£
Profit/(loss) for the year
355,443
(342,050)
Other comprehensive income
-
-
Total comprehensive income for the year
355,443
(342,050)
GASTRONOMY FOODS UK LIMITED
BALANCE SHEET
AS AT
24 DECEMBER 2023
24 December 2023
- 9 -
2023
2022
Notes
£
£
£
£
Fixed assets
Intangible assets
11
118,076
108,468
Tangible assets
12
2,266,675
2,447,650
2,384,751
2,556,118
Current assets
Stocks
13
130,966
133,834
Debtors
14
4,831,728
1,207,293
Cash at bank and in hand
266,626
286,509
5,229,320
1,627,636
Creditors: amounts falling due within one year
15
(6,968,611)
(3,408,362)
Net current liabilities
(1,739,291)
(1,780,726)
Total assets less current liabilities
645,460
775,392
Creditors: amounts falling due after more than one year
16
(28,163)
(214,527)
Provisions for liabilities
Deferred tax liability
19
(317,967)
(200,312)
317,967
200,312
Net assets
935,264
761,177
Capital and reserves
Called up share capital
21
425,000
425,000
Profit and loss reserves
510,264
336,177
Total equity
935,264
761,177
These financial statements have been prepared in accordance with the provisions relating to medium-sized companies.
The financial statements were approved by the board of directors and authorised for issue on 21 September 2024 and are signed on its behalf by:
Mr A Khan
Director
Company registration number 05612486 (England and Wales)
GASTRONOMY FOODS UK LIMITED
STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 24 DECEMBER 2023
- 10 -
Share capital
Profit and loss reserves
Total
Notes
£
£
£
Balance at 25 December 2021
425,000
850,007
1,275,007
Year ended 24 December 2022:
Loss and total comprehensive income
-
(342,050)
(342,050)
Dividends
10
-
(171,780)
(171,780)
Balance at 24 December 2022
425,000
336,177
761,177
Year ended 24 December 2023:
Profit and total comprehensive income
-
355,443
355,443
Dividends
10
-
(181,356)
(181,356)
Balance at 24 December 2023
425,000
510,264
935,264
GASTRONOMY FOODS UK LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 24 DECEMBER 2023
- 11 -
1
Accounting policies
Company information
Gastronomy Foods UK Limited is a private company limited by shares incorporated in England and Wales. The registered office is 1st Floor, KFC, Earls Park, Arlington Way, Battlefield Road, Shrewsbury, Shropshire, England, SY1 4AB.
1.1
Accounting convention
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. The principal accounting policies adopted are set out below.
This company is a qualifying entity for the purposes of FRS 102, being a member of a group where the parent of that group 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 following disclosure requirements:
Section 7 ‘Statement of Cash Flows’: Presentation of a statement of cash flow and related notes and disclosures;
Section 11 ‘Basic Financial Instruments’ and Section 12 ‘Other Financial Instrument Issues: Interest income/expense and net gains/losses for financial instruments not measured at fair value; basis of determining fair values; details of collateral, loan defaults or breaches, details of hedges, hedging fair value changes recognised in profit or loss and in other comprehensive income;
Section 26 ‘Share based Payment’: Share-based payment expense charged to profit or loss, reconciliation of opening and closing number and weighted average exercise price of share options, how the fair value of options granted was measured, measurement and carrying amount of liabilities for cash-settled share-based payments, explanation of modifications to arrangements;
Section 33 ‘Related Party Disclosures’: Compensation for key management personnel.
The financial statements of the company are consolidated in the financial statements of LARS GFUK Holdings Limited. These consolidated financial statements are available from its registered office, 1st Floor, KFC Earls Park, Arlington Way, Battlefield Road, Shrewsbury, SY1 4AB.
1.2
Going concern
These financial statements are prepared on the going concern basis. The directors have a reasonable expectation that the company will continue in operational existence for the foreseeable future. However, the directors are aware of certain material uncertainties which may cause doubt on the company's ability to continue as a going concern. The directors have reviewed the trading and cashflow of the group, which contains LARS GFUK Holdings Limited, Gastronomy Foods UK Limited and Gastronomy Restaurants Limited for a period of at least 12 months from the date of these financial statements. They are forecast to generate positive EBTIDA for the foreseeable future. At the year end there were a number of covenants that had been breached due to the trading difficulties of COVID, DHL Delivery issues and YUM not increasing sales prices in line with inflation. After the year end in February 2024 all the existing loans were renegotiated with new covenants put in place. HSBC have stated it will continue to support the business and regularly test the covenants to ensure compliance.
1.3
Turnover
Turnover comprises revenue recognised by the company in respect of goods supplied during the period, exclusive of Value Added Tax. The revenue is recognised in the date that KFC orders are placed. which in all cases is also the date when the KFC products and delivered to customers.
GASTRONOMY FOODS UK LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 24 DECEMBER 2023
1
Accounting policies
(Continued)
- 12 -
1.4
Intangible fixed assets - goodwill
Goodwill represents the excess of the cost of acquisition of unincorporated businesses over the fair value of net assets acquired. It is initially recognised as an asset at cost and is subsequently measured at cost less accumulated amortisation and accumulated impairment losses. Goodwill is considered to have a finite useful life and is amortised on a systematic basis over its expected life, which is 10 years straight line.
For the purposes of impairment testing, goodwill is allocated to the cash-generating units expected to benefit from the acquisition. Cash-generating units to which goodwill has been allocated are tested for impairment at least annually, or more frequently when there is an indication that the unit may be impaired. If the recoverable amount of the cash-generating unit is less than the carrying amount of the unit, the impairment loss is allocated first to reduce the carrying amount of any goodwill allocated to the unit and then to the other assets of the unit pro-rata on the basis of the carrying amount of each asset in the unit.
1.5
Intangible fixed 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.
Intangible assets acquired on business combinations are recognised separately from goodwill at the acquisition date where it is probable that the expected future economic benefits that are attributable to the asset will flow to the entity and the fair value of the asset can be measured reliably; the intangible asset arises from contractual or other legal rights; and the intangible asset is separable from the entity.
Amortisation 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:
Patents & licences
Over licence period
1.6
Tangible fixed assets
Tangible fixed assets 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 remaining life of the lease
Fixtures and fittings
15% straight line
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 credited or charged to profit or loss.
1.7
Impairment of fixed assets
At each reporting period 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.
GASTRONOMY FOODS UK LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 24 DECEMBER 2023
1
Accounting policies
(Continued)
- 13 -
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.
1.8
Stocks
Stocks 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 stocks to their present location and condition.
Stocks held for distribution at no or nominal consideration are measured at the lower of cost and replacement cost, adjusted where applicable for any loss of service potential.
At each reporting date, an assessment is made for impairment. Any excess of the carrying amount of stocks over its estimated selling price less costs to complete and sell is recognised as an impairment loss in profit or loss. Reversals of impairment losses are also recognised in profit or loss.
1.9
Cash and cash equivalents
Cash and cash equivalents are basic financial assets and 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 instruments
The company 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 company's balance sheet when the company becomes party to the contractual provisions of the instrument.
Financial assets and liabilities are offset, with 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
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.
GASTRONOMY FOODS UK LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 24 DECEMBER 2023
1
Accounting policies
(Continued)
- 14 -
Other financial assets
Other financial assets, including investments in equity instruments which are not subsidiaries, associates or joint ventures, are initially measured at fair value, which is normally the transaction price. Such assets are subsequently carried at fair value and the changes in fair value are recognised in profit or loss, except that investments in equity instruments that are not publicly traded and whose fair values cannot be measured reliably are measured at cost less impairment.
Impairment of financial assets
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.
Derecognition of financial assets
Financial assets are derecognised only when the contractual rights to the cash flows from the asset expire or are settled, or when the company 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.
Classification of financial liabilities
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 company after deducting all of its liabilities.
Basic financial 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.
Other financial liabilities
Derivatives, including interest rate swaps and forward foreign exchange contracts, are not basic financial instruments. Derivatives are initially recognised at fair value on the date a derivative contract is entered into and are subsequently re-measured at their fair value. Changes in the fair value of derivatives are recognised in profit or loss in finance costs or finance income as appropriate, unless hedge accounting is applied and the hedge is a cash flow hedge.
Debt instruments that do not meet the conditions in FRS 102 paragraph 11.9 are subsequently measured at fair value through profit or loss. Debt instruments may be designated as being measured at fair value through profit or loss to eliminate or reduce an accounting mismatch or if the instruments are measured and their performance evaluated on a fair value basis in accordance with a documented risk management or investment strategy.
GASTRONOMY FOODS UK LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 24 DECEMBER 2023
1
Accounting policies
(Continued)
- 15 -
Derecognition of financial liabilities
Financial liabilities are derecognised when the company’s contractual obligations expire or are discharged or cancelled.
1.11
Equity instruments
Equity instruments issued by the company 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 company.
1.12
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 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 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 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 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.
1.13
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 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.
1.14
Retirement benefits
Payments to defined contribution retirement benefit schemes are charged as an expense as they fall due.
1.15
Leases
Leases are classified as finance leases whenever the terms of the lease transfer substantially all the risks and rewards of ownership to the lessees. All other leases are classified as operating leases.
Assets held under finance leases are recognised as assets at the lower of the assets fair value at the date of inception and the present value of the minimum lease payments. The related liability is included in the balance sheet as a finance lease obligation. Lease payments are treated as consisting of capital and interest elements. The interest is charged to profit or loss so as to produce a constant periodic rate of interest on the remaining balance of the liability.
GASTRONOMY FOODS UK LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 24 DECEMBER 2023
1
Accounting policies
(Continued)
- 16 -
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 leases asset are consumed.
1.16
Government grants
Government grants are recognised at the fair value of the asset received or receivable when there is reasonable assurance that the grant conditions will be met and the grants will be received.
A grant that specifies performance conditions is recognised in income when the performance conditions are met. Where a grant does not specify performance conditions it is recognised in income when the proceeds are received or receivable. A grant received before the recognition criteria are satisfied is recognised as a liability.
2
Judgements and key sources of estimation uncertainty
In the application of the company’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.
Critical judgements
The following judgements (apart from those involving estimates) have had the most significant effect on amounts recognised in the financial statements.
Impairment of assets
Determine whether there are indicators of impairment of the company's tangible and intangible assets. Factors taken into consideration in reaching such a decision include the economic viability and expected future financial performance of the asset and where it is as a component of a larger cash generating unit, the viability and expected future performance of that unit.
Key sources of estimation uncertainty
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 (see note 12)
Tangible assets are depreciated over their useful lives taking into account residual values, where appropriate. The actual lives of the assets and residual values are assessed annually and may vary depending on the number of factors. In reassessing asset lives, factors such as technological innovation, product life cycles and maintenance programs are taken into account. Residual value assessments consider issues such as future market conditions, the remaining life of the assets and projected disposal values.
3
Turnover and other revenue
2023
2022
£
£
Turnover analysed by class of business
Sale of fast food
17,853,376
16,993,758
GASTRONOMY FOODS UK LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 24 DECEMBER 2023
3
Turnover and other revenue
(Continued)
- 17 -
2023
2022
£
£
Other revenue
Grants received
-
46,000
The whole of the turnover is generated in the UK market.
4
Exceptional item
2023
2022
£
£
Expenditure
Exceptional item - Admin costs (incl in Admin range)
(26,611)
(24,362)
5
Employees
The average monthly number of persons (including directors) employed by the company during the year was:
2023
2022
Number
Number
Management staff
12
18
Service staff
321
431
Total
333
449
Their aggregate remuneration comprised:
2023
2022
£
£
Wages and salaries
4,350,704
5,153,774
Social security costs
241,468
297,850
Pension costs
97,713
110,840
4,689,885
5,562,464
6
Directors' remuneration
2023
2022
£
£
Remuneration for qualifying services
49,297
47,471
Company pension contributions to defined contribution schemes
28,140
27,107
77,437
74,578
GASTRONOMY FOODS UK LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 24 DECEMBER 2023
6
Directors' remuneration
(Continued)
- 18 -
The number of directors for whom retirement benefits are accruing under defined contribution schemes amounted to 3 (2022 - 3).
7
Operating profit/(loss)
2023
2022
Operating profit/(loss) for the year is stated after charging/(crediting):
£
£
Government grants
-
(46,000)
Fees payable to the company's auditor for the audit of the company's financial statements
38,015
17,500
Depreciation of owned tangible fixed assets
626,761
595,172
(Profit)/loss on disposal of tangible fixed assets
-
45,079
Amortisation of intangible assets
37,842
29,600
Operating lease charges
650,428
751,422
8
Interest payable and similar expenses
2023
2022
£
£
Interest on bank overdrafts and loans
434,529
176,966
Interest on finance leases and hire purchase contracts
(5,276)
-
429,253
176,966
9
Taxation
2023
2022
£
£
Deferred tax
Origination and reversal of timing differences
(54,398)
(70,758)
Changes in tax rates
(63,256)
Total deferred tax
(117,654)
(70,758)
GASTRONOMY FOODS UK LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 24 DECEMBER 2023
9
Taxation
(Continued)
- 19 -
The actual credit for the year can be reconciled to the expected charge/(credit) for the year based on the profit or loss and the standard rate of tax as follows:
2023
2022
£
£
Profit/(loss) before taxation
237,789
(412,808)
Expected tax charge/(credit) based on the standard rate of corporation tax in the UK of 25.00% (2022: 19.00%)
59,447
(78,434)
Tax effect of expenses that are not deductible in determining taxable profit
2,364
Tax effect of income not taxable in determining taxable profit
(4,629)
Group relief
(125,670)
Amortisation on assets not qualifying for tax allowances
9,460
Deferred tax adjustments in respect of prior years
(63,255)
Losses generated
12,305
Taxation credit for the year
(117,654)
(70,758)
10
Dividends
2023
2022
£
£
Final paid
181,356
171,780
GASTRONOMY FOODS UK LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 24 DECEMBER 2023
- 20 -
11
Intangible fixed assets
Goodwill
Patents & licences
Total
£
£
£
Cost
At 25 December 2022
4,054,571
429,577
4,484,148
Additions
47,450
47,450
Disposals
(88,934)
(88,934)
At 24 December 2023
4,054,571
388,093
4,442,664
Amortisation and impairment
At 25 December 2022
4,054,571
321,109
4,375,680
Amortisation charged for the year
37,842
37,842
Disposals
(88,934)
(88,934)
At 24 December 2023
4,054,571
270,017
4,324,588
Carrying amount
At 24 December 2023
118,076
118,076
At 24 December 2022
108,468
108,468
12
Tangible fixed assets
Leasehold land and buildings
Fixtures and fittings
Total
£
£
£
Cost
At 25 December 2022
4,483,269
4,167,753
8,651,022
Additions
253,959
191,827
445,786
At 24 December 2023
4,737,228
4,359,580
9,096,808
Depreciation and impairment
At 25 December 2022
2,897,266
3,306,106
6,203,372
Depreciation charged in the year
468,739
158,022
626,761
At 24 December 2023
3,366,005
3,464,128
6,830,133
Carrying amount
At 24 December 2023
1,371,223
895,452
2,266,675
At 24 December 2022
1,586,003
861,647
2,447,650
13
Stocks
2023
2022
£
£
Finished goods and goods for resale
130,966
133,834
GASTRONOMY FOODS UK LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 24 DECEMBER 2023
- 21 -
14
Debtors
2023
2022
Amounts falling due within one year:
£
£
Amounts owed by group undertakings
3,466,438
29,305
Other debtors
999,365
930,807
Prepayments and accrued income
365,925
247,181
4,831,728
1,207,293
15
Creditors: amounts falling due within one year
2023
2022
Notes
£
£
Bank loans
17
4,803,049
575,942
Obligations under finance leases
18
28,743
Trade creditors
1,144,360
1,320,246
Amounts owed to group undertakings
754,763
Taxation and social security
751,103
615,812
Other creditors
148,938
(3,543)
Accruals and deferred income
121,161
116,399
6,968,611
3,408,362
16
Creditors: amounts falling due after more than one year
2023
2022
Notes
£
£
Bank loans and overdrafts
17
28,163
214,527
17
Loans and overdrafts
2023
2022
£
£
Bank loans
4,831,212
790,469
Payable within one year
4,803,049
575,942
Payable after one year
28,163
214,527
The bank loan and overdraft facility are secured by the following:
1. First legal charge over the leasehold properties of the company
2. Unlimited multilateral guarantee across the group and connect companies over loans of £40.3m
3. Debenture including a fixed charge over all present freehold & leasehold property
The hire purchase agreements are secured by a fixed and floating charged over the assets involved.
GASTRONOMY FOODS UK LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 24 DECEMBER 2023
17
Loans and overdrafts
(Continued)
- 22 -
At the year end there was four interest only loans totalling £4.6m which are due to mature in February 2024. There was also a capital repayment loan of £231k which is due to mature in July 2024 with an interest rate of 2.6%.
18
Finance lease obligations
2023
2022
Future minimum lease payments due under finance leases:
£
£
Within one year
28,743
Finance lease payments represent rentals payable by the company for certain items of plant and machinery. Leases include purchase options at the end of the lease period, and no restrictions are placed on the use of the assets. All leases are on a fixed repayment basis and no arrangements have been entered into for contingent rental payments.
19
Deferred taxation
The following are the major deferred tax liabilities and assets recognised by the company and movements thereon:
Liabilities
Liabilities
2023
2022
Balances:
£
£
Accelerated capital allowances
(317,967)
(200,312)
2023
Movements in the year:
£
Asset at 25 December 2022
(200,312)
Credit to profit or loss
(54,399)
Effect of change in tax rate - profit or loss
(63,256)
Asset at 24 December 2023
(317,967)
20
Retirement benefit schemes
2023
2022
Defined contribution schemes
£
£
Charge to profit or loss in respect of defined contribution schemes
97,713
110,840
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.
21
Share capital
2023
2022
2023
2022
Ordinary share capital
Number
Number
£
£
Issued and fully paid
Ordinary of £1 each
425,000
425,000
425,000
425,000
GASTRONOMY FOODS UK LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 24 DECEMBER 2023
21
Share capital
(Continued)
- 23 -
22
Operating lease commitments
Lessee
At the reporting end date the company had outstanding commitments for future minimum lease payments under non-cancellable operating leases, which fall due as follows:
2023
2022
£
£
Within one year
670,034
691,390
Between two and five years
2,196,982
2,375,852
In over five years
1,824,523
2,286,963
4,691,539
5,354,205
23
Related party transactions
Transactions with related parties
During the year the company entered into the following transactions with related parties:
Sales
Sales
2023
2022
£
£
Rent paid
173,750
235,000
Loans
2023
2022
£
£
Other related parties
446,934
112,625
During the year Gastronomy Foods UK Limited paid £173,750 (2022: £235,000) in rental payments to a non-group company that Mr A Khan has significant influence over. The rental payments are all paid at market rate.
The following amounts were outstanding at the reporting end date:
2023
2022
Amounts due from related parties
£
£
Other related parties
575,448
128,512
24
Directors' transactions
Interest free loans have been granted by the company to its directors as follows:
Description
% Rate
Opening balance
Amounts advanced
Closing balance
GASTRONOMY FOODS UK LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 24 DECEMBER 2023
24
Directors' transactions
(Continued)
- 24 -
£
£
£
Mr A Khan - Loan
-
14,720
69,000
83,720
14,720
69,000
83,720
25
Ultimate controlling party
The parent company is LARS (GFUK) Holdings Limited by virtue of its 100% shareholding.
The ultimate controlling party is Mr A Khan.
The largest and smallest group in which the results of the company are consolidated is that headed by LARS (GFUK) Holdings Limited, incorporated in England and Wales. The consolidated accounts of the company are available to the public and may be obtained from Companies House, Crown Way, Cardiff, CF14 3UZ. No other group accounts include the results of the company.
Largest group
Lars (GFUK) Holdings Limited
Smallest group
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