Registered number:
FOR THE YEAR ENDED 30 JUNE 2024
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KOREA FOODS COMPANY LIMITED
COMPANY INFORMATION
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KOREA FOODS COMPANY LIMITED
CONTENTS
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KOREA FOODS COMPANY LIMITED
STRATEGIC REPORT
FOR THE YEAR ENDED 30 JUNE 2024
The directors present the strategic report for the year ended 30th June 2024.
The Directors are satisfied with the profit for the year after taxation for the Company of £2,731,830 (2023: £3,786,274).
The Company continues to expand and Turnover has increased by 18% split by an increase in Distribution sales of 13% and an increase in Retail of 26%. Business expansion is driven by new wholesale customers, increased exposure in the multiple retailers and new Seoul Plaza stores. The Gross Profit was maintained during the year at 31% (2023: 31%) as international freight rates stabilised. All future contracts with Multinational retailers have been successfully renegotiated at revised prices for the forthcoming year. Future Developments The Company continues to grow all its operations and increased profitability has released funds to sustain growth in the Wholesale and Retail sectors. Retail turnover maintained steady growth on a like for like basis, whilst overall Retail turnover has risen significantly due to the expanded store portfolio. The Company will continue its Retail expansion nationwide in 2025. Sales to multinational supermarket chains continue to grow and significant development in this sector is forecast for 2024/2025. The Company will continue generating new demand within its existing markets and maintain its position as the leading distributor of Korean and Asian food products. The Company continues to receive support from its bankers and forecasts stable cash flows for 2025 whilst investment is continued to be made in new stores.
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KOREA FOODS COMPANY LIMITED
STRATEGIC REPORT (CONTINUED)
FOR THE YEAR ENDED 30 JUNE 2024
Liquidity Risk
The Company seeks to manage financial risk by ensuring liquidity is available to meet foreseeable obligations. Day to day cash management is controlled by detailed cash flow analysis. All future supplier payments are forecast to ensure net peak borrowings are covered by bank facilities comprising overdrafts, import trade loans and finance leases. Credit Risk Trade debtors represent the Company’s maximum exposure in relation to financial assets. It is the Company’s policy that all customers who wish to trade on credit terms are subject to strict credit verification procedures. The Company only offers these terms to recognised, creditworthy third parties. In addition, receivables balances are monitored on an ongoing basis consistent with spending patterns and debt ageing, with the result that the Company’s history of bad debt losses is not significant. Debtor days outstanding are closely monitored throughout the year and action is taken promptly when payment terms are breached. The Company has no significant concentration of credit risks, other than multinational supermarket chains, and many smaller trade customers trade on cash-on-delivery or payment-in-advance terms.
The Company uses a number of financial and non-financial key performance indicators (KPIs) to measure the Company’s performance.
The Board considers (i) Turnover to be a measure of the expansion of the business sales (ii) Gross margin a measure of the underlying profitability of sales and (iii) EBITDA as a measure of underlying profit as a viable alternative to profit.
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KOREA FOODS COMPANY LIMITED
STRATEGIC REPORT (CONTINUED)
FOR THE YEAR ENDED 30 JUNE 2024
Section 172 of the Companies Act 2006 requires a director of the company to act in a way he or she considers in good faith would most likely promote the success of the company for the benefit of its member as a whole.
The directors have regard, amongst other matters, for : - • Likely consequences of long term decisions, • Interests of the Company’s employees, • Good business relationships with suppliers, customers and retail shoppers, • Ecological impact on local community, • Maintenance of high standard of business conduct, • Acting fairly between all members of the company. Korea Foods Company Limited is controlled by the Suh family and the directors strive to ensure high standards of business ethics at all times. The directors designate day to day management of the company to senior management. They consistently review financial and operational performance, business strategy and key risks, health and safety, diversity and inclusion, environmental matters, corporate responsibility and legal compliance throughout the course of the year. New quality control management systems have recently been implemented including a balanced scorecard management system. This aims to translating the company’s strategic goals into a set of organisational performance objectives that, in turn, are measured, monitored and changed if necessary to ensure that strategic goals are met. Motivated and well trained staff are key to the success of the company and every new member of staff receives suitable training on induction. Staff are continually performance reviewed and encouraged to share in the decision making of the business. The directors meet regularly with senior management to review the current business performance and to plan future sales and purchasing strategy. Retail store managers are included in the Retail sales management planning and sites are regularly visited and reviewed to maintain high standards of customer service and compliance with all statutory relevant Food, Hygiene and Licencing Standards. The directors include senior management in all long term operating policy decisions including warehouse location, computer software and logistics. Korea Foods Company Limited’s employees originate from a diverse range of backgrounds (education, religion, race, gender, age) from UK, Europe and Asia and job opportunities are open to all. Gender pay gap statistics are constantly monitored and the directors are satisfied that all genders are equitably treated. The directors regularly review staff working conditions and ensure that all staff needs are provided where appropriate in the work place. Feedback is encouraged and constructive views will always be acted upon accordingly for the welfare of the staff. Performance indicators such as Company turnover are shared with employees on a weekly basis. The company always looks for best practice and aims to pay all local suppliers on a timely basis. Overseas suppliers are paid through Import Loans or on normal commercial import terms. The company has long standing relationships with many of its customers and will continue to assist smaller traders and restaurant customers with credit support. The directors maintain an ecological approach to the company’s packaging control and ensure that all statutory waste requirements are complied with. Every effort is made to recirculate waste package through independent contractors.
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KOREA FOODS COMPANY LIMITED
STRATEGIC REPORT (CONTINUED)
FOR THE YEAR ENDED 30 JUNE 2024
Retail stores and warehouses require cold and freezer equipment to ensure best practice procedures are maintained and food is stored in the most efficient manner. All Cold rooms have been constructed using industry standard insulation to ensure energy efficiency.
This report was approved by the board and signed on its behalf.
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KOREA FOODS COMPANY LIMITED
DIRECTORS' REPORT
FOR THE YEAR ENDED 30 JUNE 2024
The directors present their report and the financial statements for the year ended 30 June 2024.
The directors who served during the year were:
The directors are responsible for preparing the Strategic Report, the Directors' Report and the financial statements in accordance with applicable law and regulations.
In preparing these financial statements, the directors are required to:
∙select suitable accounting policies for the Company's financial statements and then apply them consistently;
∙make judgments and accounting estimates that are reasonable and prudent;
∙state whether applicable UK Accounting Standards have been followed, subject to any material departures disclosed and explained in the financial statements;
∙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 to 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.
The profit for the year, after taxation, amounted to £2,731,830 (2023 - £3,786,274).
The results for the year are set out on page 12.
No ordinary dividends were paid. The directors do not recommend payment of a final dividend. No preference dividends were paid.
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KOREA FOODS COMPANY LIMITED
DIRECTORS' REPORT (CONTINUED)
FOR THE YEAR ENDED 30 JUNE 2024
The company's policy is to consult and discuss with employees, through unions, staff councils and at meetings, matters likely to affect employee's 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.
The Company is required to report UK energy use for certain activities for which it is responsible.
Energy use has been compiled from a review of purchase information and using the 2024 Government conversion factors. The chosen intensity measure of Tonnes CO2e per employee is appropriate for a service and distribution
The Company has continued to increase energy efficiency during the year and is planning to invest in additional environmental procedures for the future. These include a systemised ESG policy, encouraging energy efficiency among staff, energy efficient lighting and packaging waste disposal, upgrading technology to allow on-line meetings and home working.
The company’s fleet of vehicles is regularly modernised to ensure vehicles are energy efficient. Delivery operations minimise the carbon footprint during journeys and avoid empty trucks where possible on returns.
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KOREA FOODS COMPANY LIMITED
DIRECTORS' REPORT (CONTINUED)
FOR THE YEAR ENDED 30 JUNE 2024
There have been no significant events affecting the Company since the year end.
The auditors, Harris & Trotter LLP, will be proposed for reappointment in accordance with section 485 of the Companies Act 2006.
This report was approved by the board and signed on its behalf.
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KOREA FOODS COMPANY LIMITED
INDEPENDENT AUDITORS' REPORT TO THE MEMBERS OF KOREA FOODS COMPANY LIMITED
We have audited the financial statements of Korea Foods Company Limited (the 'Company') for the year ended 30 June 2024, which comprise the Statement of Comprehensive Income, the Statement of Financial Position, the Statement of Cash Flows, the Statement of Changes in Equity and the related notes, including a summary of 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).
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 Auditors' 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 United Kingdom, including the Financial Reporting Council'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.
In auditing the financial statements, we have concluded that the directors' use of the going concern basis of accounting in the preparation of the financial statements is appropriate.
Based on the work we have performed, we have not identified any material uncertainties relating to events or conditions that, individually or collectively, may cast significant doubt on the Company's ability to continue as a going concern for a period of at least twelve months from when the financial statements are authorised for issue.
Our responsibilities and the responsibilities of the directors with respect to going concern are described in the relevant sections of this report.
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KOREA FOODS COMPANY LIMITED
INDEPENDENT AUDITORS' REPORT TO THE MEMBERS OF KOREA FOODS COMPANY LIMITED (CONTINUED)
The other information comprises the information included in the Annual Report other than the financial statements and our Auditors' 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.
In our opinion, based on the work undertaken in the course of the audit:
∙the information given in the Strategic Report and the Directors' Report for the financial year for which the financial statements are prepared is consistent with the financial statements; and
∙the Strategic Report and the Directors' Report have been prepared in accordance with applicable legal requirements.
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.
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KOREA FOODS COMPANY LIMITED
INDEPENDENT AUDITORS' REPORT TO THE MEMBERS OF KOREA FOODS COMPANY LIMITED (CONTINUED)
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 Auditors' 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:
Based on our understanding of the company and the industry in which it operates, we identified that the principal risks of non-compliance with laws and regulations related to the acts by the company, which were contrary to applicable laws and regulations including fraud, and we considered the extent to which non-compliance might have a material effect on the financial statements. We also considered those laws and regulations that have a direct impact on the preparation of the financial statements such as the Companies Act 2006. We evaluated management's incentives and opportunities for fraudulent manipulation of the financial statements (including the risk of override of controls), and determined that the principle risks were related to inflated revenue and profit. Audit procedures performed included: review of the financial statement disclosures to underlying supporting documentation, review of correspondence with and reports to the regulators, review of correspondence with legal advisors, enquiries of management and review of internal audit reports in so far as they related to the financial statements, and testing of journals and evaluating whether there was evidence of bias by the Directors that represented a risk of material misstatement due to fraud. There are inherent limitations in the audit procedures described above and the further removed non-compliance with laws and regulations is from the events and transactions reflected in the financial statements, the less likely we would become aware of it. Also, the risk of not detecting a material misstatement due to fraud is higher than the risk of not detecting one resulting from error, as fraud may involve deliberate concealment by, for example, forgery or intentional misrepresentations, or through collusion.
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 Auditors' Report.
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KOREA FOODS COMPANY LIMITED
INDEPENDENT AUDITORS' REPORT TO THE MEMBERS OF KOREA FOODS COMPANY LIMITED (CONTINUED)
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 Auditors' 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.
for and on behalf of
Chartered Accountants
Auditors
101 New Cavendish Street
W1W 6XH
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KOREA FOODS COMPANY LIMITED
STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEAR ENDED 30 JUNE 2024
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KOREA FOODS COMPANY LIMITED
REGISTERED NUMBER: 03896933
STATEMENT OF FINANCIAL POSITION
AS AT 30 JUNE 2024
The financial statements were approved and authorised for issue by the board and were signed on its behalf on
The notes on pages 18 to 36 form part of these financial statements.
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KOREA FOODS COMPANY LIMITED
STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 30 JUNE 2024
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KOREA FOODS COMPANY LIMITED
STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED 30 JUNE 2024
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KOREA FOODS COMPANY LIMITED
STATEMENT OF CASH FLOWS (CONTINUED)
FOR THE YEAR ENDED 30 JUNE 2024
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KOREA FOODS COMPANY LIMITED
ANALYSIS OF NET DEBT
FOR THE YEAR ENDED 30 JUNE 2024
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KOREA FOODS COMPANY LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2024
1.Accounting policies
The financial statements have been prepared under the historical cost convention unless otherwise specified within these accounting policies and in accordance with Financial Reporting Standard 102, the Financial Reporting Standard applicable in the UK and the Republic of Ireland and the Companies Act 2006.
The preparation of financial statements in compliance with FRS 102 requires the use of certain critical accounting estimates. It also requires management to exercise judgment in applying the Company's accounting policies (see note 3).
The following principal accounting policies have been applied:
These financial statements are prepared on the going concern basis which the directors believe to be appropriate.
The company continues to receive the support of its bankers and major creditors. The company's bank facilities are considered by the directors to be sufficient to support ongoing operations. The company is reliant on bank loans to help facilitate the growth in trade. The debt which has been made available to the company is underutilised and the terms of the agreement are consistently upheld by the company. Bank Import Trade Facilities remain underutilised but are available when required. The directors have reviewed the group's business plan, existing facilities, post year end performance and future forecasts and have full confidence that the company has adequate resources to continue in operational existence for the forseeable future. The directors believe it remaines appropriate to prepare the financial statements on a going concern basis.
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KOREA FOODS COMPANY LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2024
1.Accounting policies (continued)
Functional and presentation currency
Transactions and balances
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KOREA FOODS COMPANY LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2024
1.Accounting policies (continued)
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KOREA FOODS COMPANY LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2024
1.Accounting policies (continued)
All intangible assets are considered to have a finite useful life. If a reliable estimate of the useful life cannot be made, the useful life shall not exceed ten years.
Depreciation is charged so as to allocate the cost of assets less their residual value over their estimated useful lives, on a reducing balance basis.
Depreciation is provided on the following basis:
The assets' residual values, useful lives and depreciation methods are reviewed, and adjusted prospectively if appropriate, or if there is an indication of a significant change since the last reporting date.
Gains and losses on disposals are determined by comparing the proceeds with the carrying amount and are recognised in profit or loss.
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KOREA FOODS COMPANY LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2024
1.Accounting policies (continued)
Provisions are measured as the best estimate of the amount required to settle the obligation, taking into account the related risks and uncertainties.
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KOREA FOODS COMPANY LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2024
1.Accounting policies (continued)
The Company has elected to apply the provisions of Section 11 “Basic Financial Instruments” of FRS 102 to all of its financial instruments.
The Company has elected to apply the recognition and measurement provisions of IFRS 9 Financial Instruments (as adopted by the UK Endorsement Board) with the disclosure requirements of Sections 11 and 12 and the other presentation requirements of FRS 102.
Financial instruments are recognised in the Company's Statement of Financial Position 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 trade and other debtors, cash and bank balances, are initially measured at their transaction price (adjusted for transaction costs except in the initial measurement of financial assets that are subsequently measured at fair value through profit and loss) and are subsequently carried at their amortised cost using the effective interest method, less any provision for impairment, 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.
Discounting is omitted where the effect of discounting is immaterial. The Company's cash and cash equivalents, trade and most other debtors due with the operating cycle fall into this category of financial instruments.
Other financial assets
Other financial assets, which includes investments in equity instruments which are not classified as subsidiaries, associates or joint ventures, are initially measured at fair value, which is normally the recognised transaction price. Such assets are subsequently measured at fair value with the changes in fair value being recognised in the profit or loss. Where other financial assets are not publicly traded, hence their fair value cannot be measured reliably, they are measured at cost less impairment.
Impairment of financial assets
At the end of each reporting period financial assets measured at amortised cost are assessed for objective evidence of impairment. 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.
Financial assets are impaired when events, subsequent to their initial recognition, indicate the estimated future cash flows derived from the financial asset(s) have been adversely impacted. The impairment loss will be the difference between the current carrying amount and the present value of the future cash flows at the asset(s) original effective interest rate.
If there is a favourable change in relation to the events surrounding the impairment loss then the impairment can be reviewed for possible reversal. The reversal will not cause the current carrying amount to exceed the original carrying amount had the impairment not been recognised. The
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KOREA FOODS COMPANY LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2024
1.Accounting policies (continued)
impairment reversal is recognised in the profit or loss.
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 the deduction of all its liabilities.
Basic financial liabilities, which include trade and other creditors, bank loans and other loans are initially measured at their transaction price (adjusting for transaction costs except in the initial measurement of financial liabilities that are subsequently measured at fair value through profit and loss). When this constitutes a financing transaction, whereby the debt instrument is measured at the present value of the future payments discounted at a market rate of interest, discounting is omitted where the effect of discounting is immaterial.
Debt instruments are subsequently carried at their amortised cost using the effective interest rate method.
Trade creditors are obligations to pay for goods and services that have been acquired in the ordinary course of business from suppliers. Trade creditors are classified as current liabilities if the payment is due within one year. If not, they represent non-current liabilities. Trade creditors are initially recognised at their transaction price and subsequently are measured at amortised cost using the effective interest method. Discounting is omitted where the effect of discounting is immaterial.
Derecognition of financial instruments
Derecognition of financial assets
Financial assets are derecognised when their contractual right to future cash flow expire, or are settled, or when the Company transfers the asset and substantially all the risks and rewards of ownership to another party. If significant risks and rewards of ownership are retained after the transfer to another party, then the Company will continue to recognise the value of the portion of the risks and rewards retained.
Derecognition of financial liabilities
Financial liabilities are derecognised when the Company's contractual obligations expire or are discharged or cancelled.
Korea Foods Company Limited is a private company limited by shares, incorporated in England & Wales (registered number: 03896933).
The registered office address is Unit 5 Wyvern Industrial Estate, Beverley Way, New Malden, Surrey, KT3 4PH, which is also the principal place of business address.
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KOREA FOODS COMPANY LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2024
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 where the revision affects both current and future periods.
Analysis of turnover by country of destination:
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KOREA FOODS COMPANY LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2024
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KOREA FOODS COMPANY LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2024
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KOREA FOODS COMPANY LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2024
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KOREA FOODS COMPANY LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2024
12.Taxation (continued)
There were no factors that may affect future tax charges.
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