Company registration number 06424513 (England and Wales)
H J L RESTAURANTS LIMITED
ANNUAL REPORT AND FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
H J L RESTAURANTS LIMITED
COMPANY INFORMATION
DIRECTOR
Mr T Smith
SECRETARY
Mrs C E V Smith
COMPANY NUMBER
06424513
REGISTERED OFFICE
McDonalds Restaurant
Tybridge Retail Park
Hylton Road
Worcester
Worcestershire
WR2 5JS
AUDITOR
JW Hinks LLP
Chartered Accountants
19 Highfield Road
Edgbaston
Birmingham
B15 3BH
BANKERS
The Royal Bank of Scotland
Worcester Branch
5-9 Nicholas Street
Worcester
WR1 1UR
H J L RESTAURANTS LIMITED
CONTENTS
PAGE
Strategic report
1
Director's report
2
Director's responsibilities statement
3
Independent auditor's report
4 - 6
Statement of comprehensive income
7
Balance sheet
8
Statement of changes in equity
9
Statement of cash flows
10
Notes to the financial statements
11 - 21
H J L RESTAURANTS 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 results for the year and the financial position are shown in the annexed financial statements.

 

As an operator of a chain of 4 limited menu quick service restaurants, I consider our key performance indicators are turnover and gross profit. The year ended 31 December 2022 has returned good results with an increase in turnover of 10% (2022: increase of 14%), the gross margin for the year however has fallen to 40% (2022: 41%).

 

As for many businesses we believe the trading environment that we operate in to be challenging.

PRINCIPAL RISKS AND UNCERTAINTIES

The company operates in a highly competitive market. High street consumer behaviour impacts the company's turnover and the variability of commodity prices impact profitability.

 

The company is continually assessing all risks with an aim to mitigate any future threats these may have on the business.

 

With these risks and uncertainties in mind, we are aware that any plans for the future development of the business may be subject to unforeseen future events outside our control, hence we are constantly assessing our plans in line with the current environment.

On behalf of the board

Mr T Smith
DIRECTOR
20 September 2024
H J L RESTAURANTS LIMITED
DIRECTOR'S REPORT
FOR THE YEAR ENDED 31 DECEMBER 2023
- 2 -

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 a group of fast food restaurants.

RESULTS AND DIVIDENDS

The results for the year are set out on page 7.

Dividends for the year ended 31 December 2023 were paid amounting to £85,000 (2022: £79,000).

DIRECTOR

The director who held office during the year and up to the date of signature of the financial statements was as follows:

Mr T Smith
DISABLED PERSONS

The company's policy is to recruit disabled workers for those vacancies that they are able to fill. All necessary assistance with initial training courses is given. Once employed, a career plan is developed so as to ensure suitable opportunities for each disabled person. Arrangements are made, wherever possible, for retraining employees who become disabled, to enable them to perform work identified as appropriate to their aptitudes and abilities.

EMPLOYEE INVOLVEMENT

The company's policy is to give full and fair consideration to applications for employment made by disabled persons, having regard to their particular aptitudes and abilities. Disabled employees receive appropriate training to promote their career development within the company. Employees who become disabled are retrained in their existing posts where possible or retained for suitable alternative posts. Regular meetings are held between senior management and employee representatives to discuss matters of concern.

 

Information of 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 group's performance.

AUDITOR

In accordance with the company's articles, a resolution proposing that JW Hinks LLP be reappointed as auditor of the company will be put at a General Meeting.

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 T Smith
DIRECTOR
20 September 2024
H J L RESTAURANTS LIMITED
DIRECTOR'S RESPONSIBILITIES STATEMENT
FOR THE YEAR ENDED 31 DECEMBER 2023
- 3 -

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 United Kingdom Generally Accepted Accounting Practice (United Kingdom Accounting Standards and applicable law). 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, the director is required to:

 

 

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.

H J L RESTAURANTS LIMITED
INDEPENDENT AUDITOR'S REPORT
TO THE MEMBERS OF H J L RESTAURANTS LIMITED
- 4 -
OPINION

We have audited the financial statements of H J L Restaurants Limited (the 'company') for the year ended 31 December 2023 which comprise the statement of comprehensive income, the balance sheet, 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 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:

BASIS FOR OPINION

We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and applicable law. Our responsibilities under those standards are further described in the Auditor's responsibilities for the audit of the financial statements section of our report. We are independent of the company in accordance with the ethical requirements that are relevant to our audit of the financial statements in the UK, including the FRC’s Ethical Standard, and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

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.

OTHER INFORMATION

The other information comprises the information included in the annual report other than the financial statements and our auditor's report thereon. The 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:

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:

H J L RESTAURANTS LIMITED
INDEPENDENT AUDITOR'S REPORT (CONTINUED)
TO THE MEMBERS OF H J L RESTAURANTS LIMITED
- 5 -
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.

We identified areas of laws and regulations that could reasonably be expected to have a material effect on the financial statements and discussed the policies and procedures regarding compliance.

Specific areas considered were as follows:

 

Owing to the inherent limitations of an audit, there is an unavoidable risk that we may not have detected all irregularities including those leading to material misstatements in the financial statements or non-compliance with regulation, even though we have properly planned and performed our audit in accordance with auditing standards.

This risk increases the more that compliance with a law or regulation is removed from the events and transactions reflected in the financial statements, as we will be less likely to become aware of instances of non-compliance. The risk is also greater regarding irregularities occurring due to fraud rather than error, as fraud involves intentional concealment, forgery, collusion, omission or misrepresentation.

A further description of our responsibilities for the audit of the financial statements is located on the Financial Reporting Council’s website at: http://www.frc.org.uk/auditorsresponsibilities. This description forms part of our auditor’s report.

H J L RESTAURANTS LIMITED
INDEPENDENT AUDITOR'S REPORT (CONTINUED)
TO THE MEMBERS OF H J L RESTAURANTS LIMITED
- 6 -
USE OF OUR REPORT

This report is made solely to the company's members, as a body, in accordance with Chapter 3 of Part 16 of the Companies Act 2006. Our audit work has been undertaken so that we might state to the company's members those matters we are required to state to them in an auditor's report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the company and the company's members as a body, for our audit work, for this report, or for the opinions we have formed.

MARCUS ROSE FCA CTA (SENIOR STATUTORY AUDITOR)
FOR AND ON BEHALF OF
JW HINKS LLP
JW Hinks LLP
CHARTERED ACCOUNTANTS
STATUTORY AUDITOR
19 Highfield Road
Edgbaston
Birmingham
B15 3BH
20 September 2024
H J L RESTAURANTS LIMITED
STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEAR ENDED 31 DECEMBER 2023
- 7 -
2023
2022
Notes
£
£
TURNOVER
3
19,214,686
17,516,117
Cost of sales
(11,492,303)
(10,389,903)
GROSS PROFIT
7,722,383
7,126,214
Administrative expenses
(7,278,906)
(6,867,647)
Other operating income
-
0
17,350
OPERATING PROFIT
4
443,477
275,917
Interest receivable and similar income
7
4,124
-
0
Interest payable and similar expenses
8
(3,284)
(6,706)
PROFIT BEFORE TAXATION
444,317
269,211
Tax on profit
9
(110,450)
(121,621)
PROFIT FOR THE FINANCIAL YEAR
333,867
147,590

The profit and loss account has been prepared on the basis that all operations are continuing operations.

H J L RESTAURANTS LIMITED
BALANCE SHEET
AS AT
31 DECEMBER 2023
31 December 2023
- 8 -
2023
2022
Notes
£
£
£
£
FIXED ASSETS
Goodwill
11
264,818
300,361
Tangible assets
12
1,477,605
1,684,879
Investments
13
5,000
5,000
1,747,423
1,990,240
CURRENT ASSETS
Stocks
14
78,742
59,727
Debtors
15
63,384
73,172
Cash at bank and in hand
2,418,534
1,746,258
2,560,660
1,879,157
CREDITORS: AMOUNTS FALLING DUE WITHIN ONE YEAR
16
(1,781,040)
(1,517,627)
NET CURRENT ASSETS
779,620
361,530
TOTAL ASSETS LESS CURRENT LIABILITIES
2,527,043
2,351,770
CREDITORS: AMOUNTS FALLING DUE AFTER MORE THAN ONE YEAR
17
-
0
(34,594)
PROVISIONS FOR LIABILITIES
(281,000)
(320,000)
NET ASSETS
2,246,043
1,997,176
CAPITAL AND RESERVES
Called up share capital
21
100
100
Profit and loss reserves
2,245,943
1,997,076
TOTAL EQUITY
2,246,043
1,997,176
The financial statements were approved and signed by the director and authorised for issue on 20 September 2024
Mr T Smith
DIRECTOR
COMPANY REGISTRATION NO. 06424513
H J L RESTAURANTS LIMITED
STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 DECEMBER 2023
- 9 -
Share capital
Profit and loss reserves
Total
Notes
£
£
£
BALANCE AT 1 JANUARY 2022
100
1,928,486
1,928,586
YEAR ENDED 31 DECEMBER 2022:
Profit and total comprehensive income for the year
-
147,590
147,590
Dividends
10
-
(79,000)
(79,000)
BALANCE AT 31 DECEMBER 2022
100
1,997,076
1,997,176
YEAR ENDED 31 DECEMBER 2023:
Profit and total comprehensive income for the year
-
333,867
333,867
Dividends
10
-
(85,000)
(85,000)
BALANCE AT 31 DECEMBER 2023
100
2,245,943
2,246,043
H J L RESTAURANTS LIMITED
STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED 31 DECEMBER 2023
- 10 -
2023
2022
Notes
£
£
£
£
CASH FLOWS FROM OPERATING ACTIVITIES
Cash generated from operations
26
990,583
1,136,758
Interest paid
(3,284)
(6,706)
Income taxes paid
(15,620)
(245,509)
NET CASH INFLOW FROM OPERATING ACTIVITIES
971,679
884,543
INVESTING ACTIVITIES
Purchase of tangible fixed assets
(138,722)
(476,729)
Interest received
4,124
-
0
NET CASH USED IN INVESTING ACTIVITIES
(134,598)
(476,729)
FINANCING ACTIVITIES
Repayment of bank loans
(79,805)
(295,571)
Dividends paid
(85,000)
(79,000)
NET CASH USED IN FINANCING ACTIVITIES
(164,805)
(374,571)
NET INCREASE IN CASH AND CASH EQUIVALENTS
672,276
33,243
Cash and cash equivalents at beginning of year
1,746,258
1,713,015
CASH AND CASH EQUIVALENTS AT END OF YEAR
2,418,534
1,746,258
H J L RESTAURANTS LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
- 11 -
1
ACCOUNTING POLICIES
COMPANY INFORMATION

H J L Restaurants Limited is a private company limited by shares incorporated in England and Wales. The registered office is McDonalds Restaurant, Tybridge Retail Park, Hylton Road, Worcester, Worcestershire, WR2 5JS.

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 £.

1.2
GOING CONCERN

Atruet the time of approving the financial statements, the director has a reasonable expectation that the company 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
TURNOVER

Turnover represents amounts receivable for goods net of VAT and trade discounts.

1.4
INTANGIBLE FIXED ASSETS - GOODWILL

Acquired goodwill and licence fees are valued at cost less accumulated depreciation. Amortisation is calculated to write off the cost in equal annual instalments over the remaining term of the franchise agreement.

1.5
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:

Plant and machinery
10% on cost

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.

1.6
FIXED ASSET INVESTMENTS

Fixed asset investments are initially measured at cost and subsequently measured at cost less any accumulated impairment losses. The investments are assessed for impairment at each reporting date and any impairment losses or reversals of impairment losses are recognised immediately in 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.

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.

H J L RESTAURANTS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
1
ACCOUNTING POLICIES
(Continued)
- 12 -

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.

1.9
CASH AT BANK AND IN HAND

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.

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.

H J L RESTAURANTS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
1
ACCOUNTING POLICIES
(Continued)
- 13 -
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.

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.

H J L RESTAURANTS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
1
ACCOUNTING POLICIES
(Continued)
- 14 -
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

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.

2
JUDGEMENTS AND KEY SOURCES OF ESTIMATION UNCERTAINTY

In the application of the company’s accounting policies, the director is 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.

3
TURNOVER AND OTHER REVENUE

An analysis of the company's turnover is as follows:

2023
2022
£
£
TURNOVER ANALYSED BY CLASS OF BUSINESS
Product sales
18,989,860
17,263,397
Non product sales
224,826
252,720
19,214,686
17,516,117
2023
2022
£
£
TURNOVER ANALYSED BY GEOGRAPHICAL MARKET
United Kingdom
19,214,686
17,516,117
2023
2022
£
£
OTHER REVENUE
Interest income
4,124
-
H J L RESTAURANTS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
- 15 -
4
OPERATING PROFIT
2023
2022
Operating profit for the year is stated after charging:
£
£
Fees payable to the company's auditor for the audit of the company's financial statements
4,400
4,150
Depreciation of owned tangible fixed assets
345,492
334,804
Loss on disposal of tangible fixed assets
504
5,034
Amortisation of intangible assets
35,543
35,543
Operating lease charges
1,606,918
1,623,582
5
EMPLOYEES

The average monthly number of persons (including directors) employed by the company during the year was:

2023
2022
Number
Number
Crew
348
328
Management
21
23
Total
369
351

Their aggregate remuneration comprised:

2023
2022
£
£
Wages and salaries
5,051,753
4,609,208
Social security costs
230,955
230,604
Pension costs
64,447
59,089
5,347,155
4,898,901
6
DIRECTOR'S REMUNERATION
2023
2022
£
£
Remuneration for qualifying services
20,959
19,635
Company pension contributions to defined contribution schemes
812
760
21,771
20,395
7
INTEREST RECEIVABLE AND SIMILAR INCOME
2023
2022
£
£
INTEREST INCOME
Interest on bank deposits
4,124
-
0
H J L RESTAURANTS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
7
INTEREST RECEIVABLE AND SIMILAR INCOME
(Continued)
- 16 -
2023
2022
Investment income includes the following:
£
£
Interest on financial assets not measured at fair value through profit or loss
4,124
-
0
8
INTEREST PAYABLE AND SIMILAR EXPENSES
2023
2022
£
£
INTEREST ON FINANCIAL LIABILITIES MEASURED AT AMORTISED COST:
Interest on bank overdrafts and loans
3,284
6,706
9
TAXATION
2023
2022
£
£
CURRENT TAX
UK corporation tax on profits for the current period
149,547
15,621
Adjustments in respect of prior periods
(97)
-
0
Total current tax
149,450
15,621
DEFERRED TAX
Origination and reversal of timing differences
(39,000)
106,000
Total tax charge
110,450
121,621

The actual charge for the year can be reconciled to the expected charge for the year based on the profit or loss and the standard rate of tax as follows:

2023
2022
£
£
Profit before taxation
444,317
269,211
Expected tax charge based on the standard rate of corporation tax in the UK of 23.52% (2022: 19.00%)
104,503
51,150
Tax effect of expenses that are not deductible in determining taxable profit
325
1,634
Adjustments in respect of prior years
(93)
-
0
Permanent capital allowances in excess of depreciation
46,954
(35,926)
Capital items expensed
(2,239)
(1,237)
Deferred tax movement
(39,000)
106,000
Taxation charge for the year
110,450
121,621
H J L RESTAURANTS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
- 17 -
10
DIVIDENDS
2023
2022
£
£
Interim paid
85,000
79,000
11
INTANGIBLE FIXED ASSETS
Goodwill
£
COST
At 1 January 2023 and 31 December 2023
710,857
AMORTISATION AND IMPAIRMENT
At 1 January 2023
410,496
Amortisation charged for the year
35,543
At 31 December 2023
446,039
CARRYING AMOUNT
At 31 December 2023
264,818
At 31 December 2022
300,361
12
TANGIBLE FIXED ASSETS
Plant and machinery
£
COST
At 1 January 2023
3,932,697
Additions
138,722
Disposals
(24,512)
At 31 December 2023
4,046,907
DEPRECIATION AND IMPAIRMENT
At 1 January 2023
2,247,818
Depreciation charged in the year
345,492
Eliminated in respect of disposals
(24,008)
At 31 December 2023
2,569,302
CARRYING AMOUNT
At 31 December 2023
1,477,605
At 31 December 2022
1,684,879
H J L RESTAURANTS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
- 18 -
13
FIXED ASSET INVESTMENTS
2023
2022
£
£
Unlisted investments
5,000
5,000
14
STOCKS
2023
2022
£
£
Finished goods and goods for resale
78,742
59,727
15
DEBTORS
2023
2022
AMOUNTS FALLING DUE WITHIN ONE YEAR:
£
£
Trade debtors
1,619
1,301
Other debtors
7,500
18,031
Prepayments and accrued income
54,265
53,840
63,384
73,172
16
CREDITORS: AMOUNTS FALLING DUE WITHIN ONE YEAR
2023
2022
Notes
£
£
Bank loans
18
34,750
79,961
Trade creditors
197,600
101,799
Corporation tax
149,451
15,621
Other taxation and social security
697,045
619,480
Other creditors
194,121
22,887
Accruals and deferred income
508,073
677,879
1,781,040
1,517,627
17
CREDITORS: AMOUNTS FALLING DUE AFTER MORE THAN ONE YEAR
2023
2022
Notes
£
£
Bank loans and overdrafts
18
-
0
34,594
H J L RESTAURANTS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
- 19 -
18
LOANS AND OVERDRAFTS
2023
2022
£
£
Bank loans
34,750
114,555
Payable within one year
34,750
79,961
Payable after one year
-
0
34,594
19
DEFERRED TAXATION

Deferred tax assets and liabilities are offset where the company has a legally enforceable right to do so. The following is the analysis of the deferred tax balances (after offset) for financial reporting purposes:

Liabilities
Liabilities
2023
2022
BALANCES:
£
£
Accelerated capital allowances
281,000
320,000
2023
MOVEMENTS IN THE YEAR:
£
Liability at 1 January 2023
320,000
Credit to profit or loss
(39,000)
Liability at 31 December 2023
281,000

 

20
RETIREMENT BENEFIT SCHEMES
2023
2022
DEFINED CONTRIBUTION SCHEMES
£
£
Charge to profit or loss in respect of defined contribution schemes
64,447
59,089

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
100
100
100
100
H J L RESTAURANTS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
- 20 -
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
288,130
291,016
Between two and five years
1,108,006
1,236,188
In over five years
533,882
750,386
1,930,018
2,277,590
23
RELATED PARTY TRANSACTIONS

In 2018 a loan was made to the wife of the director of £50,000. As at 31 December 2023, the balance outstanding on the loan was £7,500. The loan is interest free and carries no fixed repayment terms.

 

As at 31 December 2023, an amount of £14,357 (2022: £12,653) was due to the director. The loan is interest free and carries no fixed repayment terms.

24
DIRECTORS' TRANSACTIONS

Dividends totalling £63,750 (2022 - £59,250) were paid in the year in respect of shares held by the company's director.

25
ULTIMATE CONTROLLING PARTY

The ultimate controlling party is Mr T Smith, sole director and majority shareholder.

26
CASH GENERATED FROM OPERATIONS
2023
2022
£
£
Profit for the year after tax
333,867
147,590
ADJUSTMENTS FOR:
Taxation charged
110,450
121,621
Finance costs
3,284
6,706
Investment income
(4,124)
-
0
Loss on disposal of tangible fixed assets
504
5,034
Amortisation and impairment of intangible assets
35,543
35,543
Depreciation and impairment of tangible fixed assets
345,492
334,804
MOVEMENTS IN WORKING CAPITAL:
Increase in stocks
(19,015)
(330)
Decrease in debtors
9,788
36,204
Increase in creditors
174,794
449,586
CASH GENERATED FROM OPERATIONS
990,583
1,136,758
H J L RESTAURANTS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
- 21 -
27
ANALYSIS OF CHANGES IN NET FUNDS
1 January 2023
Cash flows
31 December 2023
£
£
£
Cash at bank and in hand
1,746,258
672,276
2,418,534
Borrowings excluding overdrafts
(114,555)
79,805
(34,750)
1,631,703
752,081
2,383,784
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