Company Registration No. SC419558 (Scotland)
BURTON & SPEKE LIMITED
ANNUAL REPORT AND FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2024
BURTON & SPEKE LIMITED
COMPANY INFORMATION
Directors
Mr S Geddes-Moody
Mrs S M K Geddes
Ms E McBain
Mr A Hay
Company number
SC419558
Registered office
Tynemount House
Ormiston
Tranent
East Lothian
EH35 5NN
Auditor
Johnston Carmichael LLP
227 West George Street
Glasgow
G2 2ND
BURTON & SPEKE LIMITED
CONTENTS
Page
Strategic report
1 - 3
Directors' report
4
Directors' responsibilities statement
5
Independent auditor's report
6 - 8
Statement of comprehensive income
9
Balance sheet
10
Statement of changes in equity
11
Notes to the financial statements
12 - 23
BURTON & SPEKE LIMITED
STRATEGIC REPORT
FOR THE YEAR ENDED 31 DECEMBER 2024
- 1 -
The directors present the strategic report for the year ended 31 December 2024.
Review of the business and future developments
In 2024 Burton & Speke Limited (“the company”) turnover grew by 4% over the previous year. The main contributors being a full year’s trading for all Starbucks stores and continuing growth of the Starbucks business across the portfolio.
The company made a profit before tax for the financial year of £2.2m (2023: £2.3m) with net assets of £3.7m (2023: £2.5m) at the balance sheet date. Challenges to the margin came through increased input costs: Labour, coffee, food and utility costs.
To manage the growth over the next few years, the company continues to recruit against a rolling 3 year plan that reflects the management skills, experience and capacity necessary to effectively execute its business plans.
In 2025 the business focus will be on the opening of 7 new Starbucks sites (3 already opened in February and March 2025). Revenue & profit increases will be achieved by expanding the company’s Starbucks estate, increasing transaction numbers and increasing prices to meet the challenge of government-imposed labour cost increases (which will also filter through to us by way of our suppliers).
Principal risks and uncertainties
This section lays out the key risks faced by the company and the mitigation strategies, many of which will be incorporated into the company’s business strategy. The risks are listed in order of decreasing impact.
Risk that Licensor changes strategic direction and stops franchising.
Very low likelihood in the medium term, increasing over the long term. Very high impact.
Impact: This is one of the two biggest risks to the company’s business as it would lead to a significant loss of recurring revenue and profit. The company would receive several year’s notice of an adverse decision and the Licensor would likely request the company to sell its estate to a larger franchisor or back to the Licensor.
Mitigation: The company can do little to reduce the risk of a Licensor deciding to stop franchising, but the impact is being reduced by the parent entity of the company continuing to diversify its portfolio of franchises.
Risk that Licensor withdraws the Company’s licence to operate
Very low likelihood. Very high impact.
Impact: This one of two biggest risks to the company’s business as it would lead to a significant loss of recurring revenue and profit. The company would receive several year’s notice of an adverse decision and the Licensor would likely request the company to sell its estate to a larger franchisor or back to the Licensor.
Mitigation: The likelihood of this happening can be reduced by the company meeting key performance indicators detailed in the licence agreement and by exceeding financial and operational goals.
BURTON & SPEKE LIMITED
STRATEGIC REPORT (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2024
- 2 -
Principal risks and uncertainties (continued)
Risk of reputational damage to Licensor, or the company, resulting in financial loss
Low but growing likelihood. Impact could range from low to very high.
For the company itself, the most likely reputational risk is a customer being exposed to an unlabelled allergen and having a severe allergic reaction.
Impact: Could range from very little to a major boycott of one of the company’s stores, resulting in a significant fall in sales over the short term and permanent loss of some customers over the longer term. The insurance pay-out to a customer who suffers an allergic reaction to an unlabelled allergen could be high.
Mitigation: Reduce the financial impact of reputational damage by continuing to monitor for escalating issues and prepare internal communications their staff can use to answer questions from the public. The company can reduce the risk of insurance pay-outs for unlabelled allergens by tightening and testing relevant operational procedures.
Risk of another Global Pandemic
Very low likelihood. Very high impact.
Impact: During the Covid pandemic, the UK Government designated Starbucks Drive-Thru’ (only) as “Essential”, a designation that allowed these stores stay open during the Covid pandemic. When the next pandemic comes it is reasonable to assume the same decision will be made.
Mitigation: The company has very good relationships with its suppliers, primarily by paying its debts timely. This paid dividends during the Covid pandemic as the company was able to quickly procure safety items such as Perspex screens, masks, etc. and it is reasonable to assume the same will happen next time. For franchises designated “essential”, the company will look to its banks to provide any loans needed to cover additional operational costs. For franchises designated “non-essential”, the company will take the risk of stores being shuttered and still being able to meet all remaining operational costs from reserves.
Risks arising from Regulatory Changes
Scotland’s new National Planning Framework (4) came into effect in February 2023. The impact is categorized as medium.
Impact: While the impact is lower than anticipated as new stores are getting approved, planning permission is taking longer to obtain as permission is often only obtained on appeal and additional costs are being incurred e.g. to employ local lobbyists and PR agents. At the moment it is too early to say if the risk of NPF4 resulting in fewer out-of-town retail parks being built is being realised.
Mitigation: Align the company’s build-out strategy with the goals of NPF4 e.g. by focusing on providing car charging centres as the primary reason for building out-of-town retail parks. Partner with companies who already operate in large out-of-town retail parks and could make land available for a company store e.g. Morrisons. Look for new franchises that can operate from Class 1 premises rather than Class 3 which Starbucks stores require.
BURTON & SPEKE LIMITED
STRATEGIC REPORT (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2024
- 3 -
Principal risks and uncertainties (continued)
Risk that worsening economy will lead to a fall in revenues in 2025 and 2026
High likelihood. Medium to low impact.
Impact: The impact of the worsening economic situation is expected to be low as most customers are categorised as affluent or aspirational who will continue to spend on premium products even as the economy deteriorates.
Mitigation: Closely monitor prices of competitors and store internal costs and increase prices where appropriate and reduce wastage. Outperform competitors and retain drive-thru customers by focussing on speed of service and accuracy. Outperform competitors and retain in-house customers by focussing on customer connection at the point-of-sale and ensuring customers get the perfect beverage in a clean environment from a friendly barista.
Risk that inflation & high energy costs will lead to higher operating costs
Likelihood: Already happening. Low impact.
Impact: Low due to mitigation strategies already put in place.
Mitigation: Cost increases offset by price increases, revenue growth and customer retention and investment in green energy.
Risk that stores recruitment remains difficult and inflation drives large earnings rises
Impact: Higher inflation has not resulted in rises in unemployment and so recruitment remains challenging. Staff retention has not changed and remains at historic averages. Earnings in 2024 rose in line with inflation to offer competitive packages to attract new staff and retain existing staff.
Mitigation: The Company will continue to be an attractive employer and in 2024 raised pay above the National Living Wage to remain competitive in attracting new talent and retaining existing staff.
Key performance indicators
The trading results for the company are set out on page 10. The company’s key financial performance indicators for the year were:
Mr S Geddes-Moody
Director
10 July 2025
BURTON & SPEKE LIMITED
DIRECTORS' REPORT
FOR THE YEAR ENDED 31 DECEMBER 2024
- 4 -
The directors present their annual report and financial statements for the year ended 31 December 2024. These financial statements cover the 52 week period ended 29 December 2024.
Principal activities
The principal activity of the company continued to be that of a coffee franchise.
Results and dividends
The results for the year are set out on page 9.
Ordinary dividends were paid amounting to £1,090,000 (2023: £1,700,000). The directors do not recommend payment of a further dividend.
Directors
The directors who held office during the year and up to the date of signature of the financial statements were as follows:
Mr S Geddes-Moody
Mrs S M K Geddes
Ms E McBain
Mr A Hay
Future developments
The company has chosen in accordance with Companies Act 2006, s. 414C(11) to set out in the strategic report information required by Large and Medium-sized Companies and Groups (Accounts and Reports) Regulations 2008, Sch. 7 to be contained in the directors' report. It has done so in respect of future developments.
Auditor
The auditor, Johnston Carmichael LLP, is deemed to be reappointed under section 487(2) of the Companies Act 2006.
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.
Going concern
The directors have carefully considered the impact of the macroeconomic uncertainties on the company’s financial position, liquidity and future performance. As set out in the strategic report, the company has continued to trade strongly throughout this year and the directors believe that it is experiencing good levels of sales growth and profitability. Therefore, the directors believe that the company is well placed to manage its business risks successfully. Accordingly, they have a reasonable expectation that the company has adequate resources to continue in operational existence for the foreseeable future. Thus they continue to adopt the going concern basis of accounting in preparing the financial statements.
On behalf of the board
Mr S Geddes-Moody
Director
10 July 2025
BURTON & SPEKE LIMITED
DIRECTORS' RESPONSIBILITIES STATEMENT
FOR THE YEAR ENDED 31 DECEMBER 2024
- 5 -
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 judgements and accounting estimates that are reasonable and prudent;
prepare the financial statements on the going concern basis unless it is inappropriate to presume that the company will continue in business.
The directors are responsible for keeping adequate accounting records that are sufficient to show and explain the company’s transactions and disclose with reasonable accuracy at any time the financial position of the company and enable them to ensure that the financial statements comply with the Companies Act 2006. They are also responsible for safeguarding the assets of the company and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.
BURTON & SPEKE LIMITED
INDEPENDENT AUDITOR'S REPORT
TO THE MEMBER OF BURTON & SPEKE LIMITED
- 6 -
Opinion
We have audited the financial statements of Burton & Speke Limited (the 'company') for the year ended 31 December 2024 which comprise the statement of comprehensive income, the balance sheet, the statement of changes in equity and notes to the financial statements, including significant accounting policies. The financial reporting framework that has been applied in their preparation is applicable law and United Kingdom Accounting Standards, including Financial Reporting Standard 102 The Financial Reporting Standard applicable in the UK and Republic of Ireland (United Kingdom Generally Accepted Accounting Practice).
In our opinion the financial statements:
give a true and fair view of the state of the company's affairs as at 31 December 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.
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 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.
The other information comprises the information included in the annual report other than the financial statements and our auditor's report thereon. The directors are responsible for the other information contained within the annual report. Our opinion on the financial statements does not cover the other information and, except to the extent otherwise explicitly stated in our report, we do not express any form of assurance conclusion thereon. Our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the course of the audit, or otherwise appears to be materially misstated. If we identify such material inconsistencies or apparent material misstatements, we are required to determine whether this gives rise to a material misstatement in the financial statements themselves. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact.
We have nothing to report in this regard.
Opinions on other matters prescribed by the Companies Act 2006
In our opinion, based on the work undertaken in the course of our audit:
the information given in the strategic report and the directors' report for the financial year for which the financial statements are prepared is consistent with the financial statements; and
the strategic report and the directors' report have been prepared in accordance with applicable legal requirements.
BURTON & SPEKE LIMITED
INDEPENDENT AUDITOR'S REPORT (CONTINUED)
TO THE MEMBER OF BURTON & SPEKE LIMITED
- 7 -
Matters on which we are required to report by exception
In the light of our 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 and the directors' report.
We have nothing to report in respect of the following matters in relation to which the Companies Act 2006 requires us to report to you if, in our opinion:
adequate accounting records have not been kept, or returns adequate for our audit have not been received from branches not visited by us; or
the financial statements are not in agreement with the accounting records and returns; or
certain disclosures of 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 on page 5, 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 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.
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.
Extent to which the audit is considered capable of detecting irregularities, including fraud
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 assessed whether the engagement team collectively had the appropriate competence and capabilities to identify or recognise non-compliance with laws and regulations by considering their experience, past performance and support available.
All engagement team members were briefed on relevant identified laws and regulations and potential fraud risks at the planning stage of the audit. Engagement team members were reminded to remain alert to any indications of fraud or non-compliance with laws and regulations throughout the audit.
We obtained an understanding of the legal and regulatory frameworks that are applicable to company and the sector in which it operates, focusing on those provisions that had a direct effect on the determination of material amounts and disclosures in the financial statements. The most relevant frameworks we identified include:
Companies Act 2006;
UK Corporate Tax legislation
VAT legislation;
Food safety standards;
Health and safety standards; and
UK Generally Accepted Accounting Practice.
BURTON & SPEKE LIMITED
INDEPENDENT AUDITOR'S REPORT (CONTINUED)
TO THE MEMBER OF BURTON & SPEKE LIMITED
- 8 -
Extent to which the audit was considered capable of detecting irregularities, including fraud (continued)
We gained an understanding of how the company is complying with these laws and regulations by making enquiries of management and those charged with governance. We corroborated these enquiries through our review of relevant correspondence with regulatory bodies and board meeting minutes.
We assessed the susceptibility of the financial statements to material misstatement, including how fraud might occur, by meeting with management and those charged with governance to understand where it was considered there was susceptibility to fraud. This evaluation also considered how management and those charged with governance were remunerated and whether this provided an incentive for fraudulent activity. We considered the overall control environment and how management and those charged with governance oversee the implementation and operation of controls. We identified a heightened fraud risk in relation to:
In addition to the above, the following procedures were performed to provide reasonable assurance that the financial statements were free of material fraud or error:
Reviewing minutes of meetings of those charged with governance for reference to: breaches of laws and regulation or for any indication of any potential litigation and claims; and events or conditions that could indicate an incentive or pressure to commit fraud or provide an opportunity to commit fraud;
Reviewing the level of and reasoning behind the company’s procurement of legal and professional services;
Performing audit procedures over the risk of management override of controls, including testing of journal entries and other adjustments for appropriateness, evaluating the business rationale of significant transactions outside the normal course of business and reviewing judgements made by management in their calculation of accounting estimates for potential management bias;
Performing sales cutoff testing ensuring transactions were recorded in the appropriate accounting period;
Completion of appropriate checklists and use of our experience to assess the company’s compliance with the Companies Act 2006; and
Agreement of the financial statement disclosures to supporting documentation.
Our audit procedures were designed to respond to the risk of material misstatements in the financial statements, recognising that 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 intentional concealment, forgery, collusion, omission or misrepresentation. There are inherent limitations in the audit procedures performed 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.
This report is made solely to the company's member 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 member those matters we are required to state to the member 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 member for our audit work, for this report, or for the opinions we have formed.
Christopher Wilkie (Senior Statutory Auditor)
For and on behalf of Johnston Carmichael LLP
10 July 2025
Chartered Accountants
Statutory Auditor
227 West George Street
Glasgow
G2 2ND
BURTON & SPEKE LIMITED
STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEAR ENDED 31 DECEMBER 2024
- 9 -
2024
2023
Notes
£
£
Turnover
3
18,137,330
17,366,794
Cost of sales
(10,779,186)
(10,414,803)
Gross profit
7,358,144
6,951,991
Administrative expenses
(5,190,131)
(4,583,099)
Other operating income
8,482
1,772
Operating profit
4
2,176,495
2,370,664
Interest payable and similar expenses
6
(18,782)
(33,692)
Profit before taxation
2,157,713
2,336,972
Tax on profit
7
180,902
(400,257)
Profit and total comprehensive income for the financial year
2,338,615
1,936,715
The statement of comprehensive income has been prepared on the basis that all operations are continuing operations.
BURTON & SPEKE LIMITED
BALANCE SHEET
AS AT
31 DECEMBER 2024
31 December 2024
- 10 -
2024
2023
Notes
£
£
£
£
Fixed assets
Goodwill
9
524,273
Other intangible assets
9
278,562
263,262
Total intangible assets
802,835
263,262
Tangible assets
10
4,219,428
4,092,665
5,022,263
4,355,927
Current assets
Stocks
12
123,662
103,703
Debtors
13
824,191
564,385
Cash at bank and in hand
1,073,806
747,495
2,021,659
1,415,583
Creditors: amounts falling due within one year
14
(2,968,064)
(2,698,753)
Net current liabilities
(946,405)
(1,283,170)
Total assets less current liabilities
4,075,858
3,072,757
Creditors: amounts falling due after more than one year
15
(56,103)
(156,103)
Provisions for liabilities
Deferred tax liability
17
306,375
451,889
(306,375)
(451,889)
Net assets
3,713,380
2,464,765
Capital and reserves
Called up share capital
19
2
2
Profit and loss reserves
3,713,378
2,464,763
Total equity
3,713,380
2,464,765
The financial statements were approved by the board of directors and authorised for issue on 10 July 2025 and are signed on its behalf by:
Mr S Geddes-Moody
Director
Company Registration No. SC419558
BURTON & SPEKE LIMITED
STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 DECEMBER 2024
- 11 -
Share capital
Profit and loss reserves
Total
Notes
£
£
£
Balance at 1 January 2023
2
2,228,048
2,228,050
Year ended 31 December 2023:
Profit and total comprehensive income for the year
-
1,936,715
1,936,715
Dividends
8
-
(1,700,000)
(1,700,000)
Balance at 31 December 2023
2
2,464,763
2,464,765
Year ended 31 December 2024:
Profit and total comprehensive income for the year
-
2,338,615
2,338,615
Dividends
8
-
(1,090,000)
(1,090,000)
Balance at 31 December 2024
2
3,713,378
3,713,380
BURTON & SPEKE LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2024
- 12 -
1
Accounting policies
Company information
Burton & Speke Limited is a private company limited by shares incorporated in Scotland. The registered office and principal place of business is Tynemount House, Ormiston, Tranent, East Lothian, EH35 5NN.
1.1
Accounting convention
These financial statements have been prepared in accordance with FRS 102 “The Financial Reporting Standard applicable in the UK and Republic of Ireland” (“FRS 102”) and the requirements of the Companies Act 2006.
The financial statements are prepared in sterling, which is the functional currency of the company. Monetary amounts in these financial statements are rounded to the nearest £.
The financial statements have been prepared under the historical cost convention. The principal accounting policies adopted are set out below.
This company is a qualifying entity for the purposes of FRS 102, being a member of a group where the parent of that group prepares publicly available consolidated financial statements, including this company, which are intended to give a true and fair view of the assets, liabilities, financial position and profit or loss of the group. The company has therefore taken advantage of exemptions from the following disclosure requirements:
Section 7 ‘Statement of Cash Flows’: Presentation of a statement of cash flow and related notes and disclosures;
Section 11 ‘Basic Financial Instruments’ and Section 12 ‘Other Financial Instrument Issues: Interest income/expense and net gains/losses for financial instruments not measured at fair value; basis of determining fair values;
Section 33 ‘Related Party Disclosures’: Compensation for key management personnel.
The financial statements of the company are consolidated in the financial statements of The Explorer Group Limited. These consolidated financial statements are available from its registered office, Tynemount House, Ormiston, Tranent, East Lothian, EH35 5NN.
1.2
Going concern
The directors have carefully considered the impact of the macroeconomic uncertainties on the company’s financial position, liquidity and future performance. As set out in the strategic report, the company has continued to trade strongly throughout this year and the directors believe that it is experiencing good levels of sales growth and profitability. Therefore, the directors believe that the company is well placed to manage its business risks successfully. Accordingly, they have a reasonable expectation that the company has adequate resources to continue in operational existence for the foreseeable future. Thus they continue to adopt the going concern basis of accounting in preparing the financial statements.true
1.3
Turnover
Turnover relates to the sale of food and drink and is recognised at the point of sale. Turnover is shown net of VAT and other sales related taxes.
BURTON & SPEKE LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2024
1
Accounting policies
(Continued)
- 13 -
1.4
Intangible fixed assets - goodwill
Goodwill represents the excess of the cost of acquisition of a business over the fair value of the rights acquired. It is initially recognised as an asset at cost and is subsequently measured at cost less accumulated amortisation and accumulated impairment losses. Goodwill is considered to have a finite useful life and is amortised on a systematic basis over its expected life, which is 20 years.
For the purposes of impairment testing, goodwill is allocated to the cash-generating units expected to benefit from the acquisition. Cash-generating units to which goodwill has been allocated are tested for impairment at least annually, or more frequently when there is an indication that the unit may be impaired. If the recoverable amount of the cash-generating unit is less than the carrying amount of the unit, the impairment loss is allocated first to reduce the carrying amount of any goodwill allocated to the unit and then to the other assets of the unit pro-rata on the basis of the carrying amount of each asset in the unit.
1.5
Intangible fixed assets other than goodwill
Intangible assets acquired separately from a business are recognised at cost and are subsequently measured at cost less accumulated amortisation and accumulated impairment losses.
Amortisation is recognised so as to write off the cost or valuation of assets less their residual values over their useful lives on the following basis:
Franchise Fees
10% straight line
1.6
Tangible fixed assets
Tangible fixed assets are initially measured at cost and subsequently measured at cost, net of depreciation and any impairment losses.
Depreciation is recognised so as to write off the cost or valuation of assets less their residual values over their useful lives on the following bases:
Leasehold improvements
Over 15 years
Plant and machinery
20% straight line
Computer equipment
33.3% straight line
Motor vehicles
25% reducing balance
The gain or loss arising on the disposal of an asset is determined as the difference between the sale proceeds and the carrying value of the asset, and is credited or charged to profit or loss.
1.7
Impairment of fixed assets
At each reporting period end date, the company reviews the carrying amounts of its tangible and intangible assets to determine whether there is any indication that those assets have suffered an impairment loss. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment loss (if any). Where it is not possible to estimate the recoverable amount of an individual asset, the company estimates the recoverable amount of the cash-generating unit to which the asset belongs.
1.8
Stocks
Stocks are stated at the lower of cost and estimated selling price less costs to complete and sell.
At each reporting date, an assessment is made for impairment. Any excess of the carrying amount of stocks over its estimated selling price less costs to complete and sell is recognised as an impairment loss in profit or loss. Reversals of impairment losses are also recognised in profit or loss.
BURTON & SPEKE LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2024
1
Accounting policies
(Continued)
- 14 -
1.9
Cash and cash equivalents
Cash and cash equivalents are basic financial assets and include cash in hand, deposits held at call with banks, other short-term liquid investments with original maturities of three months or less, and bank overdrafts. Bank overdrafts are shown within borrowings in current liabilities.
1.10
Financial instruments
The company has elected to apply the provisions of Section 11 ‘Basic Financial Instruments’ and Section 12 ‘Other Financial Instruments Issues’ of FRS 102 to all of its financial instruments.
Financial instruments are recognised in the company's balance sheet when the company becomes party to the contractual provisions of the instrument.
Financial assets and liabilities are offset, with the net amounts presented in the financial statements, when there is a legally enforceable right to set off the recognised amounts and there is an intention to settle on a net basis or to realise the asset and settle the liability simultaneously.
Basic financial assets
Basic financial assets, which include debtors and cash and bank balances, are measured at transaction price including transaction costs.
Impairment of financial assets
Financial assets are assessed for indicators of impairment at each reporting end date.
Financial assets are impaired where there is objective evidence that, as a result of one or more events that occurred after the initial recognition of the financial asset, the estimated future cash flows have been affected. If an asset is impaired, the impairment loss is the difference between the carrying amount and the present value of the estimated cash flows discounted at the asset’s original effective interest rate. The impairment loss is recognised in profit or loss.
If there is a decrease in the impairment loss arising from an event occurring after the impairment was recognised, the impairment is reversed. The reversal is such that the current carrying amount does not exceed what the carrying amount would have been, had the impairment not previously been recognised. The impairment reversal is recognised in profit or loss.
Derecognition of financial assets
Financial assets are derecognised only when the contractual rights to the cash flows from the asset expire or are settled, or when the company transfers the financial asset and substantially all the risks and rewards of ownership to another entity, or if some significant risks and rewards of ownership are retained but control of the asset has transferred to another party that is able to sell the asset in its entirety to an unrelated third party.
Classification of financial liabilities
Financial liabilities and equity instruments are classified according to the substance of the contractual arrangements entered into. An equity instrument is any contract that evidences a residual interest in the assets of the company after deducting all of its liabilities.
BURTON & SPEKE LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2024
1
Accounting policies
(Continued)
- 15 -
Basic financial liabilities
Basic financial liabilities, including creditors and bank loans, 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.
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 statement of comprehensive income 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 statement of comprehensive income, 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.
BURTON & SPEKE LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2024
1
Accounting policies
(Continued)
- 16 -
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 leased asset are consumed.
2
Judgements and key sources of estimation uncertainty
In the application of the company’s accounting policies, the directors are required to make judgements, estimates and assumptions about the carrying amount of assets and liabilities that are not readily apparent from other sources. The estimates and associated assumptions are based on historical experience and other factors that are considered to be relevant. Actual results may differ from these estimates.
The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised where the revision affects only that period, or in the period of the revision and future periods where the revision affects both current and future periods.
Key sources of estimation uncertainty
The estimates and assumptions which have a significant risk of causing a material adjustment to the carrying amount of assets and liabilities are as follows.
Useful life of tangible fixed assets - £4.2m (2023 - £4.1m)
Tangible fixed assets are depreciated over their useful lives taking into account residual values, where appropriate. This assessment requires the directors to exercise judgement as to the period over which the associated economic benefits are expected to arise.
3
Turnover and other revenue
An analysis of the company's turnover is as follows:
2024
2023
£
£
Turnover analysed by class of business
Coffee franchise
18,137,330
17,366,794
BURTON & SPEKE LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2024
- 17 -
4
Operating profit
2024
2023
Operating profit for the year is stated after charging/(crediting):
£
£
Fees payable to the company's auditor for the audit of the company's financial statements
21,250
20,025
Depreciation of owned tangible fixed assets
676,020
606,855
Depreciation of tangible fixed assets held under finance leases
-
24,753
(Profit)/loss on disposal of tangible fixed assets
(2,677)
43,353
Amortisation of intangible assets
72,293
41,750
Operating lease charges
1,229,781
1,149,286
5
Employees
The average monthly number of persons (including directors) employed by the company during the year was:
2024
2023
Number
Number
Sales operatives
243
231
Their aggregate remuneration comprised:
2024
2023
£
£
Wages and salaries
4,089,705
3,809,459
Social security costs
261,484
215,718
Pension costs
53,789
44,296
4,404,978
4,069,473
6
Interest payable and similar expenses
2024
2023
£
£
Interest on bank overdrafts and loans
18,782
25,671
Interest on finance leases and hire purchase contracts
-
8,021
18,782
33,692
7
Taxation
2024
2023
£
£
Current tax
UK corporation tax on profits for the current period
122,714
489,210
Adjustments in respect of prior periods
(158,102)
Total current tax
(35,388)
489,210
BURTON & SPEKE LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2024
7
Taxation
2024
2023
£
£
(Continued)
- 18 -
Deferred tax
Origination and reversal of timing differences
(163,839)
(88,953)
Adjustment in respect of prior periods
18,325
Total deferred tax
(145,514)
(88,953)
Total tax (credit)/charge
(180,902)
400,257
The actual (credit)/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:
2024
2023
£
£
Profit before taxation
2,157,713
2,336,972
Expected tax charge based on the standard rate of corporation tax in the UK of 25.00% (2023: 23.52%)
539,428
549,656
Tax effect of expenses that are not deductible in determining taxable profit
9,119
3,542
Adjustments in respect of prior years
(158,102)
Group relief
(596,570)
(146,695)
Deferred tax adjustments in respect of prior years
18,325
Remeasurement of deferred tax for changes in tax rates
(5,264)
Fixed asset differences
6,898
(982)
Taxation (credit)/charge for the year
(180,902)
400,257
8
Dividends
2024
2023
£
£
Final paid
1,090,000
1,700,000
BURTON & SPEKE LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2024
- 19 -
9
Intangible fixed assets
Goodwill
Franchise Fees
Total
£
£
£
Cost
At 1 January 2024
427,000
427,000
Additions
551,866
60,000
611,866
At 31 December 2024
551,866
487,000
1,038,866
Amortisation and impairment
At 1 January 2024
163,738
163,738
Amortisation charged for the year
27,593
44,700
72,293
At 31 December 2024
27,593
208,438
236,031
Carrying amount
At 31 December 2024
524,273
278,562
802,835
At 31 December 2023
263,262
263,262
Goodwill outlined above is in relation to the acquisition of a Starbucks Store during the current year. Further details are outlined at note 20.
10
Tangible fixed assets
Leasehold improvements
Plant and machinery
Computer equipment
Motor vehicles
Total
£
£
£
£
£
Cost
At 1 January 2024
4,382,721
1,554,778
494,730
268,403
6,700,632
Additions
472,093
321,182
69,227
862,502
Disposals
(59,671)
(3,234)
(6,095)
(66,405)
(135,405)
At 31 December 2024
4,795,143
1,872,726
557,862
201,998
7,427,729
Depreciation and impairment
At 1 January 2024
1,173,058
941,370
396,183
97,356
2,607,967
Depreciation charged in the year
306,780
241,180
90,332
37,728
676,020
Eliminated in respect of disposals
(20,805)
(6,095)
(48,786)
(75,686)
At 31 December 2024
1,459,033
1,182,550
480,420
86,298
3,208,301
Carrying amount
At 31 December 2024
3,336,110
690,176
77,442
115,700
4,219,428
At 31 December 2023
3,209,663
613,408
98,547
171,047
4,092,665
11
Associates
Details of the company's associates at 31 December 2024 are as follows:
BURTON & SPEKE LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2024
11
Associates
(Continued)
- 20 -
Name of undertaking
Registered office
Class of
% Held
shares held
Direct
Goam Holdings Ltd
Pavilion 3 12 Marchburn Drive, Paisley, PA3 2SJ
Ordinary
50.00
Goam Property Ltd
Pavilion 3 12 Marchburn Drive, Paisley, PA3 2SJ
Ordinary
50.00
12
Stocks
2024
2023
£
£
Finished goods and goods for resale
123,662
103,703
13
Debtors
2024
2023
Amounts falling due within one year:
£
£
Corporation tax recoverable
233,650
Amounts owed by group undertakings
2,484
Other debtors
417,640
414,548
Prepayments and accrued income
172,901
147,353
824,191
564,385
14
Creditors: amounts falling due within one year
2024
2023
Notes
£
£
Bank loans and overdrafts
16
100,156
100,044
Trade creditors
960,284
849,392
Amounts owed to group undertakings
66,128
Corporation tax
103,669
Other taxation and social security
456,548
435,751
Other creditors
505,081
515,116
Accruals and deferred income
879,867
694,781
2,968,064
2,698,753
15
Creditors: amounts falling due after more than one year
2024
2023
Notes
£
£
Bank loans and overdrafts
16
56,103
156,103
BURTON & SPEKE LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2024
- 21 -
16
Loans and overdrafts
2024
2023
£
£
Bank loans
156,103
256,103
Bank overdrafts
156
44
156,259
256,147
Payable within one year
100,156
100,044
Payable after one year
56,103
156,103
Bank loans are secured by fixed and floating charges over the company's assets.
17
Deferred taxation
The following are the major deferred tax liabilities and assets recognised by the company and movements thereon:
Liabilities
Liabilities
2024
2023
Balances:
£
£
Accelerated capital allowances
312,178
456,564
Short-term timing differences
(5,803)
(4,675)
306,375
451,889
2024
Movements in the year:
£
Liability at 1 January 2024
451,889
Credit to profit or loss
(145,514)
Liability at 31 December 2024
306,375
18
Retirement benefit schemes
2024
2023
Defined contribution schemes
£
£
Charge to profit or loss in respect of defined contribution schemes
53,789
44,296
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.
BURTON & SPEKE LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2024
- 22 -
19
Share capital
2024
2023
2024
2023
Ordinary share capital
Number
Number
£
£
Issued and fully paid
Ordinary shares of £1 each
2
2
2
2
20
Acquisition
On 14 August 2024 the company acquired the business of the Starbucks Store at Unit 23 Livingston Designer Outlet. The acquisition supports the company's growth strategy and compliments the company's existing portfolio of Starbucks Stores.
Fair Value
£
Property, plant and equipment
98,134
Goodwill
551,866
Total consideration
650,000
Satisfied by:
£
Cash
650,000
The business acquisition has been accounted for under the acquisition accounting method. Goodwill recognised on the acquisition represents the value attributed to the anticipated future economic benefits. Goodwill is being amortised over a period of 20 years following an assessment made by the directors over the period which the economic benefits are expected to be derived.
The business acquisition contributed £336,219 and £7,887 to the company's turnover and profit for the year respectively.
21
Financial commitments, guarantees and contingent liabilities
The company is party to a cross guarantee between itself, its parent company The Explorer Group Limited and its fellow subsidiaries. This is a guarantee with the company's banker providing a floating charge over the company's assets. The potential liability to the company under this guarantee at 31 December 2024 was £7,736,561 (2023 - £nil).
BURTON & SPEKE LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2024
- 23 -
22
Operating lease commitments
Lessee
At the reporting end date the company had outstanding commitments for future minimum lease payments under non-cancellable operating leases, which fall due as follows:
2024
2023
£
£
Within one year
1,358,860
1,149,076
Between two and five years
5,431,960
4,821,904
In over five years
10,982,515
10,312,346
17,773,335
16,283,326
23
Related party transactions
Transactions with related parties
The company has taken advantage of the exemption available under paragraph 33.1A of Financial Reporting Standard 102 not to disclose transactions with any wholly owned subsidiary undertaking within the group.
During the year the company entered into the following transactions with related parties:
Loan repayments received
Property rental and management charges made
2024
2023
2024
2023
£
£
£
£
Other related parties
-
207,000
390,000
392,353
The following amounts were outstanding at the reporting end date:
2024
2023
Amounts due to related parties
£
£
Other related parties
462
422
The following amounts were outstanding at the reporting end date:
2024
2023
Amounts due from related parties
£
£
Other related parties
24,927
21,964
24
Ultimate controlling party
The company is controlled by its parent company The Explorer Group Limited.
The company's accounts are included within the consolidated accounts of The Explorer Group Limited. The Explorer Group Limited is the parent undertaking of the only group within which the company belongs. Copies of the consolidated accounts of The Explorer Group Limited are available from the registered office at Tynemount House, Ormiston, Tranent, EH35 5NN.
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