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Company registration number: 03488907
Treats Foods Limited
Financial statements
30 June 2024
Treats Foods Limited
Contents
Directors and other information
Strategic report
Directors report
Independent auditor's report to the members
Statement of comprehensive income
Statement of financial position
Statement of changes in equity
Notes to the financial statements
Treats Foods Limited
Directors and other information
Directors Mr A Merali
Mrs S Merali
Secretary Mr S Damani
Company number 03488907
Registered office 7 Greenock Road
London
W3 8DU
Auditor Anderson Shaw
Chartered Certified Accountants
Statutory Auditors
Scottish Provident House
76 - 80 College Road
Harrow, Middlesex
HA1 1BQ
Treats Foods Limited
Strategic report
Year ended 30 June 2024
Business review
The launch of UK government backed Energy Bills Discount Scheme in March 2023 provided timely support to households and businesses in the wake of Ukraine-Russia conflict and resultant energy price hikes. That support ended in March 2024, however, by then the UK economy had grown strongly in the first half of 2024 when the economy was rebounding from the brief recession at the end of 2023. GDP increased by 0.70% between January and March, and 0.50% between April and June 2024. However, the growth has slowed since then across a broad range of business sectors. One area of our business associated with a global brand that has been severely impacted is due to the Gaza-Israel conflict that started in October 2023. Any prospect of an end to this conflict in foreseeable future is very slim, forcing affected business owners like us to remain cautious. The termination of a temporary outside catering contract helped improve our gross margins but resulted in a decrease in overall turnover. The revenue from this exceptional line of business helped in maintaining cashflow and keep our workers in employment during and after the pandemic. Overall, we traded reasonably well and managed headwinds from various fronts.
Key performance indicators
With rapidly changing retail landscape and unprecedented global events, the directors have taken a prudent approach to setting up key performance indicators. The targets set are more attuned to actual performance over the past few years bearing in mind recent conflicts will not be resolved within foreseeable future. However, the directors are very keen to remain committed to keeping our staff members motivated and achieving qualitative and quantitative results so that our competitive edge and market share can be maintained in a highly competitive retail market. Key performance indicators achieved during the year-ended 30 June 2024 are summarised below: 2024 2023Combined turnover £12,099,221 £14,167,897Gross profit £7,382,695 £8,339,304Gross profit (%) 61.02% 58.86%Profit before taxation £450,834 £1,353,584
Principal risk and uncertainties facing the company
Following the general election in July 2024, any upswing in investor confidence soon turned into a gloom after the new chancellor presented her Autumn Budget 2024 on 30 October 2024. Sluggish economic growth and rising borrowing costs in addition to measures announced in the Autumn Budget would further dent any hopes of a quick and sustainable recovery. An increase of 1.20% in employers' national insurance contributions to 15%, reduction in business rates relief for eligible small businesses from 75% to 40% and an increase in National Minimum Wage by more than 6% from £11.44 an hour to £12.21 an hour would affect profitability. Extraordinary changes in inheritance tax, capital gains tax and rules relating to non-domicile would force many business owners and high net individuals to put on hold their investment commitments. The prospect of US tariffs on UK goods and retaliatory UK tariffs on US goods would prolong inflationary pressures, eliminating any possibility of a cut in UK interest rates in the second quarter of 2025 or sooner. Governor of Bank of England has reiterated the need to be extremely cautious due to persistently high rate of inflation and uncertainty in the economy.
Business owners face multiple challenges at fiscal and geopolitical levels. Although the UK economy grew strongly in the first half of 2024, the current economic outlook for 2025 is somewhat subdued and stagnant. The Ukraine-Russia and Gaza-Israel conflicts coupled with the threat of tariffs by US government are causing unprecedented turbulence across the world. The change in US government's attitude towards Europe is forcing European leaders to have US-independent defence policy to protect Europe's interest against any threat by Russia. The UK government's proposal to increase defence spending will put undue pressure on already stretched resources that would result in spending cuts in critical social and welfare services.
Although there are dark clouds on the horizon, we are confident we can ride out any storm as we have successfully faced many challenges and slowdowns caused by recessions, banking crash, pandemic and wars over the past forty years. Our cautious and prudent approach has put us in good stead.
Future developments
The directors are very keen on capitalising their strength in manufacturing and retailing by promoting value-proposition to our customers thereby offering "unique and good quality food at affordable prices". The remodelled new concept will be launched in our home territory, London, very soon. With a very strong pipeline and highly motivated and well-trained operations team, we are confident the new concept to be launched in strategic and prime locations in 2025 would add much needed contribution to our overall business and help limit our exposure to external forces that are beyond our control.
The directors are committed to investing their time and resources introducing new technology and green energy, and developing key personnel to remain competitive and resilient.
This report was approved by the board of directors on 28 March 2025 and signed on behalf of the board by:
Mr A Merali
Director
Treats Foods Limited
Directors report
Year ended 30 June 2024
The directors present their report and the financial statements of the company for the year ended 30 June 2024.
Directors
The directors who served the company during the year were as follows:
Mr A Merali
Mrs S Merali
Dividends
The directors do not recommend the payment of a dividend.
Financial instruments
The company does not actively use financial instruments as part of its financial risk management. It is exposed to the usual credit risk and cash flow risk associated with selling on credit and manages this through credit control procedures.
Disclosure of information in the strategic report.
The company has chosen in accordance with section 414C(11) of the Companies Act 2006 (Strategic Report and Directors' Report) Regulations 2013 to set out in the company's strategic report information required by schedule 7 of the Large and Medium-sized Companies and Groups (Accounts and Reports) Regulations 2008.
Directors responsibilities statement
The directors are responsible for preparing the strategic report, directors 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 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 judgments and accounting estimates that are reasonable and prudent; and
- 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.
Auditor
Each of the persons who is a director at the date of approval of this report confirms that:
- so far as they are aware, there is no relevant audit information of which the company's auditor is unaware; and - they have taken all steps that they ought to have taken as a director to make themselves aware of any relevant audit information and to establish that the company's auditor is aware of that information.
The auditor is deemed to have been re-appointed in accordance with section 487 of the Companies Act 2006.
This report was approved by the board of directors on 28 March 2025 and signed on behalf of the board by:
Mr A Merali
Director
Treats Foods Limited
Independent auditor's report to the members of
Treats Foods Limited
Year ended 30 June 2024
Opinion
We have audited the financial statements of Treats Foods Limited (the 'company') for the year ended 30 June 2024 which comprise the statement of comprehensive income, statement of financial position, statement of changes in equity and notes to the financial statements, 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 FRS 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 30 June 2024 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.
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 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.
Other Information
The other information comprises the information included in the annual report, other than the financial statements and our auditor’s report thereon. The directors are responsible for the other information. 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. In connection with our audit of the financial statements, 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 audit or otherwise appears to be materially misstated. If we identify such material inconsistencies or apparent material misstatements, we are required to determine whether there is a material misstatement in the financial statements or a material misstatement of the other information. 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 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 has been prepared in accordance with applicable legal requirements.
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 where 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 the returns; or - certain disclosures of directors' 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. 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: As part of our planning process:- We enquired of management the systems and controls the company has in place, the areas of the financial statements that are mostly susceptible to the risk of irregularities and fraud, and whether there was any known, suspected or alleged fraud. The company did not inform us of any known, suspected or alleged fraud.- We obtained an understanding of the legal and regulatory frameworks applicable to the company. We determined that the following were most relevant: FRS 102, Companies Act 2006, Health and Safety, Food standards, Environmental, Employment Laws and UK Tax laws and regulations- We considered the incentives and opportunities that exist in the company, including the extent of management bias, which present a potential for irregularities and fraud to be perpetuated, and tailored our risk assessment accordingly.- Using our knowledge of the company, together with the discussions held with the directors of company at the planning stage, we formed a conclusion on the risk of misstatement due to irregularities including fraud and tailored our procedures according to this risk assessment.The key procedures we undertook to detect irregularities including fraud during the course of the audit included:- Identifying and testing journal entries and the overall accounting records, in particular those that were significant and unusual. Performed analytical procedures and obtain explanations for major variances.- Reviewing the financial statement disclosures and determining whether accounting policies have been appropriately applied.- Assessing the extent of compliance, or lack of, with the relevant laws and regulations.- Testing key revenue lines for evidence of management bias.- Performing a physical verification of fixed assets and stock.- Obtaining third-party confirmation of bank balances.- Documenting and verifying all significant related party balances and transactions. Obtaining written confirmations for intercompany balances.- Reviewing and challenging the assumptions and judgements used by management in their significant accounting estimates in respect of carrying values of fixed assets, depreciation of fixed assets, amortisation of intangible assets and valuation of stock.- Assessing the extent of compliance, with the relevant laws and regulations.- Reviewing documentation such as the company board minutes, correspondence with solicitors, correspondence with HMRC for indications of irregularities including fraud.Owing 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. The primary responsibility for the prevention and detection of irregularities and fraud rests with the directors.A further description of our responsibilities is available on the Financial Reporting Council's website at: http://www.frc.org.uk/auditorsresponsibilities.This description forms part of our auditor's report. As part of an audit in accordance with ISAs (UK), we exercise professional judgment and maintain professional scepticism throughout the audit. we also: - Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control. - Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the internal control. - Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by the directors. - Conclude on the appropriateness of the directors use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the company’s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor’s report to the related disclosures in the financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor’s report. However, future events or conditions may cause the company to cease to continue as a going concern. - Evaluate the overall presentation, structure and content of the financial statements, including the disclosures, and whether the financial statements represent the underlying transactions and events in a manner that achieves fair presentation. We communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit.
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 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.
Bharatkumar L Shah (Senior Statutory Auditor)
For and on behalf of
Anderson Shaw
Chartered Certified Accountants and Statutory Auditors
Scottish Provident House
76 - 80 College Road
Harrow, Middlesex
HA1 1BQ
28 March 2025
Treats Foods Limited
Statement of comprehensive income
Year ended 30 June 2024
2024 2023
Note £ £
Turnover 4 12,099,221 14,167,897
Cost of sales ( 4,716,526) ( 5,828,593)
_______ _______
Gross profit 7,382,695 8,339,304
Administrative expenses ( 7,179,127) ( 7,216,146)
Other operating income 5 224,782 214,151
_______ _______
Operating profit 6 428,350 1,337,309
Other interest receivable and similar income 9 30,263 16,291
Interest payable and similar expenses 10 ( 7,779) ( 16)
_______ _______
Profit before taxation 450,834 1,353,584
Tax on profit 11 ( 131,693) ( 320,158)
_______ _______
Profit for the financial year and total comprehensive income 319,141 1,033,426
_______ _______
All the activities of the company are from continuing operations.
Treats Foods Limited
Statement of financial position
30 June 2024
2024 2023
Note £ £ £ £
Fixed assets
Intangible assets 12 9,998 7,500
Tangible assets 13 10,763,905 9,528,631
_______ _______
10,773,903 9,536,131
Current assets
Stocks 14 173,454 178,910
Debtors 15 1,482,666 2,466,932
Cash at bank and in hand 1,195,811 969,493
_______ _______
2,851,931 3,615,335
Creditors: amounts falling due
within one year 16 ( 6,860,772) ( 6,755,143)
_______ _______
Net current liabilities ( 4,008,841) ( 3,139,808)
_______ _______
Total assets less current liabilities 6,765,062 6,396,323
Provisions for liabilities 17 ( 469,927) ( 420,329)
_______ _______
Net assets 6,295,135 5,975,994
_______ _______
Capital and reserves
Called up share capital 20 50,000 50,000
Fair value reserve 21 454,209 454,209
Profit and loss account 21 5,790,926 5,471,785
_______ _______
Shareholders funds 6,295,135 5,975,994
_______ _______
These financial statements were approved by the board of directors and authorised for issue on 28 March 2025 , and are signed on behalf of the board by:
Mr A Merali
Director
Company registration number: 03488907
Treats Foods Limited
Statement of changes in equity
Year ended 30 June 2024
Called up share capital Fair value reserve Profit and loss account Total
£ £ £ £
At 1 July 2022 50,000 454,209 4,438,359 4,942,568
Profit for the year 1,033,426 1,033,426
_______ _______ _______ _______
Total comprehensive income for the year - - 1,033,426 1,033,426
_______ _______ _______ _______
At 30 June 2023 and 1 July 2023 50,000 454,209 5,471,785 5,975,994
Profit for the year 319,141 319,141
_______ _______ _______ _______
Total comprehensive income for the year - - 319,141 319,141
_______ _______ _______ _______
At 30 June 2024 50,000 454,209 5,790,926 6,295,135
_______ _______ _______ _______
Treats Foods Limited
Notes to the financial statements
Year ended 30 June 2024
1. General information
The company is a private company limited by shares, registered in England and Wales. The address of the registered office is 7 Greenock Road, London, W3 8DU. The company is a wholly owned subsidiary of Treats Holdings Limited and operates as part of the group's retail and manufacturing division.The company's principal activities are retail and manufacturing of sandwiches and other food products. The retail arm trades under the "Treats" fascia and also operates as franchisor to independent franchisees retailing under those brands. In addition, the company operates retail stores as franchisee for a globally renowned coffee house.
2. Statement of compliance
These financial statements have been prepared in compliance with FRS 102, 'The Financial Reporting Standard applicable in the UK and Republic of Ireland', and the Companies Act 2006.
3. Accounting policies
Basis of preparation
The financial statements have been prepared on the historical cost basis, as modified by the revaluation of certain financial assets and liabilities and investment properties measured at fair value through profit or loss.
The financial statements are prepared in sterling, which is the functional currency of the entity.
Going concern
The Directors have carefully considered the impact of the macroeconomic uncertainties and the conflict in Ukraine and Gaza on the Company's financial position, liquidity and future performance. The Directors, at the time of approving the financial statements, have a reasonable expectation that the Company has adequate resources to continue in operational existence for the foreseeable future. In reaching this conclusion the directors have considered the financial position of the Company's cash and liquidity position and financial support from Group Companies .The going concern basis of accounting has therefore continued to be adopted in preparing the financial statements.
Disclosure exemptions
The company satisfies the criteria of being a qualifying entity as defined in FRS 102. Its financial statements are consolidated into the financial statements of Treats Holdings Limited which can be obtained from the Registrar of Companies (England and Wales), Companies House, Cardiff. As such, advantage has been taken of the following disclosure exemptions available under paragraph 1.12 of FRS102:(a) No cash flow statement has been presented for the company.(b) Disclosures in respect of financial instruments have not been presented .
Judgements and key sources of estimation uncertainty
The preparation of the financial statements requires management to make judgements, estimates and assumptions that affect the amounts reported. These estimates and judgments are continually reviewed and are based on the experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances.The key areas of judgment are in respect of fair value adjustments of investment properties, depreciation of fixed assets, amortisation of intangible assets, accruals and valuation of stock.Further details of significant estimates and judgements are set out in the relevant accounting policies and notes to the financial statements.
Turnover
Turnover is measured at the fair value of the consideration received or receivable for goods supplied and services rendered, net of discounts and Value Added Tax.
Revenue from the sale of goods is recognised when the significant risks and rewards of ownership have transferred to the buyer (usually on despatch of the goods); the amount of revenue can be measured reliably; it is probable that the associated economic benefits will flow to the entity; and the costs incurred or to be incurred in respect of the transactions can be measured reliably.
Taxation
The taxation expense represents the aggregate amount of current and deferred tax recognised in the reporting period. Tax is recognised in the statement of comprehensive income, except to the extent that it relates to items recognised in other comprehensive income or directly in capital and reserves. In this case, tax is recognised in other comprehensive income or directly in capital and reserves, respectively. Current tax is recognised on taxable profit for the current and past periods. Current tax is measured at the amounts of tax expected to pay or recover using the tax rates and laws that have been enacted or substantively enacted at the reporting date.
Deferred tax is recognised in respect of all timing differences at the reporting date. Unrelieved tax losses and other 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. Deferred tax is measured using the tax rates and laws that have been enacted or substantively enacted by the reporting date that are expected to apply to the reversal of the timing difference.
Foreign currencies
Foreign currency transactions are initially recorded in the functional currency, by applying the spot exchange rate as at the date of the transaction. Monetary assets and liabilities denominated in foreign currencies are translated at the exchange rate ruling at the reporting date, with any gains or losses being taken to profit or loss.
Operating leases
Lease payments are recognised as an expense over the lease term on a straight-line basis. The aggregate benefit of lease incentives is recognised as a reduction to expense over the lease term, on a straight-line basis.
Goodwill
Goodwill arises on business acquisitions and represents the excess of the cost of the acquisition over the company's interest in the net amount of the identifiable assets, liabilities and contingent liabilities of the acquired business. Goodwill is measured at cost less accumulated amortisation and accumulated impairment losses. It is amortised on a straight line basis over its useful life. Where a reliable estimate of the useful life of goodwill or intangible assets cannot be made, the life is presumed not to exceed ten years.
Intangible assets
Intangible assets are initially recorded at cost, and are subsequently stated at cost less any accumulated amortisation and any accumulated impairment losses .
Amortisation
Amortisation is calculated so as to write off the cost of an asset, less its estimated residual value, over the useful life of that asset as follows:
Goodwill - over ten years in equal instalments
Domain name - over four years in equal instalments
If there is an indication that there has been a significant change in amortisation rate, useful life or residual value of an intangible asset, the amortisation is revised prospectively to reflect the new estimates.
Tangible assets
tangible assets are initially recorded at cost, and are subsequently stated at cost less any accumulated depreciation and impairment losses. Any tangible assets carried at revalued amounts are recorded at the fair value at the date of revaluation less any subsequent accumulated depreciation and subsequent accumulated impairment losses. An increase in the carrying amount of an asset as a result of a revaluation, is recognised in other comprehensive income and accumulated in capital and reserves, except to the extent it reverses a revaluation decrease of the same asset previously recognised in profit or loss. A decrease in the carrying amount of an asset as a result of revaluation is recognised in other comprehensive income to the extent of any previously recognised revaluation increase accumulated in capital and reserves in respect of that asset. Where a revaluation decrease exceeds the accumulated revaluation gains accumulated in capital and reserves in respect of that asset, the excess shall be recognised in profit or loss.
Depreciation
Depreciation is calculated so as to write off the cost or valuation of an asset, less its residual value, over the useful economic life of that asset as follows:
Freehold properties - Freehold land - Nil: Freehold Buildings - Over 50 years
Short leasehold properties - Straight line over the life of the lease
Fittings fixtures and equipment - 20 % reducing balance
Motor vehicles - 25 % reducing balance
If there is an indication that there has been a significant change in depreciation rate, useful life or residual value of tangible assets, the depreciation is revised prospectively to reflect the new estimates .
Investment properties
Investment properties are measured initially at cost, which include purchase price and any directly attributable expenditure. Investment properties are revalued to their fair value at each reporting date and any changes in fair value are recognised in profit or loss.
Impairment
A review for indicators of impairment is carried out at each reporting date, with the recoverable amount being estimated where such indicators exist. Where the carrying value exceeds the recoverable amount, the asset is impaired accordingly. Prior impairments are also reviewed for possible reversal at each reporting date. When it is not possible to estimate the recoverable amount of an individual asset, an estimate is made of the recoverable amount of the cash-generating unit to which the asset belongs. The cash-generating unit is the smallest identifiable group of assets that includes the asset and generates cash inflows that are largely independent of the cash inflows from other assets or groups of assets. For impairment testing of goodwill, the goodwill acquired in a business combination is, from the acquisition date, allocated to each of the cash-generating units that are expected to benefit from the synergies of the combination, irrespective of whether other assets or liabilities of the company are assigned to those units .
Stocks
Stocks are measured at the lower of cost and estimated selling price less costs to complete and sell. Cost includes all costs of purchase, costs of conversion and other costs incurred in bringing the stocks to their present location and condition.Costs being generally determined on the basis of first-in, first-out method.
Provisions
Provisions are recognised when the entity has an obligation at the reporting date as a result of a past event; it is probable that the entity will be required to transfer economic benefits in settlement and the amount of the obligation can be estimated reliably. Provisions are recognised as a liability in the statement of financial position and the amount of the provision as an expense. Provisions are initially measured at the best estimate of the amount required to settle the obligation at the reporting date and subsequently reviewed at each reporting date and adjusted to reflect the current best estimate of the amount that would be required to settle the obligation. Any adjustments to the amounts previously recognised are recognised in profit or loss unless the provision was originally recognised as part of the cost of an asset. When a provision is measured at the present value of the amount expected to be required to settle the obligation, the unwinding of the discount is recognised in finance costs in profit or loss in the period it arises.
Financial instruments
A financial asset or a financial liability is recognised only when the company becomes a party to the contractual provisions of the instrument.Basic financial instruments are initially recognised at the transaction price, unless the arrangement constitutes a financing transaction, where it is recognised at the present value of the future payments discounted at a market rate of interest for a similar debt instrument.Debt instruments are subsequently measured at amortised cost.Other financial instruments are subsequently measured at fair value, with any changes recognised in profit or loss.Financial assets that are measured at cost or amortised cost are reviewed for objective evidence of impairment at the end of each reporting date. If there is objective evidence of impairment, an impairment loss is recognised in profit or loss immediately.For all equity instruments regardless of significance, and other financial assets that are individually significant, these are assessed individually for impairment. Other financial assets or either assessed individually or grouped on the basis of similar credit risk characteristics.Any reversals of impairment are recognised in profit or loss immediately, to the extent that the reversal does not result in a carrying amount of the financial asset that exceeds what the carrying amount would have been had the impairment not previously been recognised .
Defined contribution plans
Contributions to defined contribution plans are recognised as an expense in the period in which the related service is provided.
4. Turnover
Turnover arises from:
2024 2023
£ £
Sale of goods 10,247,478 12,596,660
Franchise and management 1,851,743 1,571,237
_______ _______
12,099,221 14,167,897
_______ _______
The whole of the turnover is attributable to the principal activity of the company wholly undertaken in the United Kingdom.
5. Other operating income
2024 2023
£ £
Rental income 222,597 213,372
Other operating income 2,185 779
_______ _______
224,782 214,151
_______ _______
6. Operating profit
Operating profit is stated after charging/(crediting):
2024 2023
£ £
Amortisation of intangible assets 10,831 7,500
Depreciation of tangible assets 412,032 405,730
(Gain)/loss on disposal of tangible assets - 12,644
(Gain)/loss on disposal of intangible assets - 122,500
Operating lease rentals 703,761 644,088
Foreign exchange differences 237 1,478
Fees payable for the audit of the financial statements 25,000 20,000
_______ _______
7. Staff costs
The average number of persons employed by the company during the year, including the directors, amounted to:
2024 2023
Total 147 161
_______ _______
The aggregate payroll costs incurred during the year were:
2024 2023
£ £
Wages and salaries 3,725,118 3,750,560
Social security costs 324,111 331,080
Other pension costs 47,698 55,631
_______ _______
4,096,927 4,137,271
_______ _______
8. Directors remuneration
The directors aggregate remuneration in respect of qualifying services was:
2024 2023
£ £
Remuneration 348,021 350,359
Company contributions to pension schemes in respect of qualifying services 2,657 2,693
_______ _______
350,678 353,052
_______ _______
The number of directors who accrued benefits under company pension plans was as follows:
2024 2023
Number Number
Defined contribution plans 2 2
_______ _______
Remuneration of the highest paid directors in respect of qualifying services:
2024 2023
£ £
Aggregate remuneration 248,311 247,303
Company contributions to pension plans in respect of qualifying services 1,321 1,347
_______ _______
249,632 248,650
_______ _______
9. Other interest receivable and similar income
2024 2023
£ £
Bank deposits 95 -
Other interest receivable and similar income 30,168 16,291
_______ _______
30,263 16,291
_______ _______
10. Interest payable and similar expenses
2024 2023
£ £
Other interest payable and similar expenses 7,779 16
_______ _______
11. Tax on profit
Major components of tax expense
2024 2023
£ £
Current tax:
UK current tax expense 82,095 216,666
_______ _______
Deferred tax:
Origination and reversal of timing differences 49,598 103,492
_______ _______
Tax on profit 131,693 320,158
_______ _______
Reconciliation of tax expense
The tax assessed on the profit for the year is higher than (2023: higher than) the standard rate of corporation tax in the UK of 25.00 % (2023: 20.50%).
2024 2023
£ £
Profit before taxation 450,834 1,353,584
_______ _______
Profit multiplied by rate of tax 112,709 277,485
Effect of expenses not deductible for tax purposes 1,710 1,274
Effect of capital allowances and depreciation ( 32,324) ( 89,754)
Rounding on tax charge - ( 44)
Loss on disposal/reclass of Fixed Assets - 27,705
Timing differences reversal/origination 49,598 103,492
_______ _______
Tax on profit 131,693 320,158
_______ _______
12. Intangible assets
Goodwill Domain name Total
£ £ £
Cost
At 1 July 2023 624,577 - 624,577
Additions - 13,329 13,329
_______ _______ _______
At 30 June 2024 624,577 13,329 637,906
_______ _______ _______
Amortisation
At 1 July 2023 617,077 - 617,077
Charge for the year 7,499 3,332 10,831
_______ _______ _______
At 30 June 2024 624,576 3,332 627,908
_______ _______ _______
Carrying amount
At 30 June 2024 1 9,997 9,998
_______ _______ _______
At 30 June 2023 7,500 - 7,500
_______ _______ _______
13. Tangible assets
Freehold properties Short leasehold properties Fixtures, fittings and equipment Motor vehicles Investment properties Total
£ £ £ £ £ £
Cost
At 1 July 2023 4,552,615 543,230 4,722,263 157,184 3,681,665 13,656,957
Additions 715,885 49,465 881,956 - - 1,647,306
_______ _______ _______ _______ _______ _______
At 30 June 2024 5,268,500 592,695 5,604,219 157,184 3,681,665 15,304,263
_______ _______ _______ _______ _______ _______
Depreciation
At 1 July 2023 237,417 397,645 3,442,514 50,750 - 4,128,326
Charge for the year 33,231 35,862 327,216 15,723 - 412,032
_______ _______ _______ _______ _______ _______
At 30 June 2024 270,648 433,507 3,769,730 66,473 - 4,540,358
_______ _______ _______ _______ _______ _______
Carrying amount
At 30 June 2024 4,997,852 159,188 1,834,489 90,711 3,681,665 10,763,905
_______ _______ _______ _______ _______ _______
At 30 June 2023 4,315,198 145,585 1,279,749 106,434 3,681,665 9,528,631
_______ _______ _______ _______ _______ _______
Investment properties
Included within the above is investment properties measured at fair value as follows:
£
At 1 July 2023 and 30 June 2024 3,681,665
_______
The directors, who are not a professionally qualified valuers, have reviewed the fair value of the investment properties at 30 June 2024 which is not materially different to the carry value of £3,681,665 (2023 - £3,681,665).Accordingly no adjustment has been reflected in the financial statements. The valuation was arrived at by reference to market evidence of transaction prices for similar properties in its location and takes into account the state of the rental market in the area where the property is situated.The historical cost of the investment properties are £3,076,053.
14. Stocks
2024 2023
£ £
Finished goods and goods for resale 173,454 178,910
_______ _______
15. Debtors
2024 2023
£ £
Trade debtors 233,669 174,081
Prepayments and accrued income 486,365 569,612
Other debtors 762,632 1,723,239
_______ _______
1,482,666 2,466,932
_______ _______
Other debtors includes:-sundry loans amounting to £426,484 (2023 - £414,062) which are repayable on demand and bears interest at commercial rate (Note-25):-directors loan amounting to £Nil (2023 - £1,161,109) which is repayable on demand and bears interest at commercial rate (Note-24).
16. Creditors: amounts falling due within one year
2024 2023
£ £
Trade creditors 943,473 988,500
Amounts owed to group undertakings 4,881,383 4,308,574
Accruals and deferred income 794,642 847,464
Corporation tax - 216,667
Social security and other taxes 103,937 248,443
Director loan accounts 9,009 14,132
Other creditors 128,328 131,363
_______ _______
6,860,772 6,755,143
_______ _______
The amounts owed to group undertakings are non interest bearing loans and repayable on demand.Directors' current account is interest free and repayable on demand .
17. Provisions
Deferred tax (note 18) Total
£ £
At 1 July 2023 420,329 420,329
Additions 49,598 49,598
_______ _______
At 30 June 2024 469,927 469,927
_______ _______
18. Deferred tax
The deferred tax included in the statement of financial position is as follows:
2024 2023
£ £
Included in provisions (note 17) 469,927 420,329
_______ _______
The deferred tax account consists of the tax effect of timing differences in respect of:
2024 2023
£ £
Accelerated capital allowances 318,524 268,926
Fair value adjustment of investment properties 151,403 151,403
_______ _______
469,927 420,329
_______ _______
19. Employee benefits
The amount recognised in profit or loss in relation to defined contribution plans was £ 47,698 (2023: £ 55,631 ).
20. Called up share capital
Issued, called up and fully paid
2024 2023
No £ No £
Ordinary shares of £ 1.00 each 50,000 50,000 50,000 50,000
_______ _______ _______ _______
21. Reserves
Profit and loss account:This reserve records retained earnings and accumulated losses.Fair value reserve account:This reserve records fair value gains and losses on investment properties .
22. Operating leases
The company as lessee
The total future minimum lease payments under non-cancellable operating leases are as follows:
£ £
Later than 1 year and not later than 5 years 1,008,770 1,108,986
Later than 5 years 1,332,814 687,875
_______ _______
2,341,584 1,796,861
_______ _______
23. Other financial commitments
The company has entered into composite cross company guarantees with Treats Investments Ltd, London Metro Hotels Ltd, Treats Holdings Ltd and Capital Hotels Ltd in respect of bank loan facilities for the other group companies .
24. Directors advances, credits and guarantees
During the year the directors entered into the following advances with the company:
2024
Balance brought forward Advances to the directors Amounts repaid Balance o/standing
£ £ £ £
Mr A Merali and Mrs S Merali 1,161,109 - ( 1,161,109) -
_______ _______ _______ _______
2023
Balance brought forward Advances to the directors Amounts repaid Balance o/standing
£ £ £ £
Mr A Merali and Mrs S Merali - 1,161,109 - 1,161,109
_______ _______ _______ _______
The company advanced a loan to the directors during April 2023 - June 2023. The loan is unsecured with interest charged at commercial rates. Interest charged in the year amounted to £14,811. The loan was repaid by the directors in March 2024.
25. Related party transactions
The company has advanced a loan to AM Coffee Retail Ltd (AM Coffee) which is controlled by close family members of the directors. The loan is unsecured with interest charged at commercial rates. As at 30 June 2024, £426,484 (2023 - £414,062) was owed by AM Coffee. Interest charged in the year amounted to £12,422 (2023 - £12,060 ).
26. Controlling party
Treats Holdings Limited, a company incorporated in England and Wales, is the ultimate holding company.In the opinion of the directors, Mr A Merali controls the company.