REGISTERED NUMBER: SC477637 (Scotland)

ALTEA 4 RESTAURANTS LTD

Strategic Report, Report of the Director and

Financial Statements for the Year Ended 31 December 2024

Page

Company Information

1

Strategic Report

2

to

3

Report of the Director

4

to

5

Report of the Independent Auditors

6

to

9

Income Statement

10

Other Comprehensive Income

11

Balance Sheet

12

Statement of Changes in Equity

13

Cash Flow Statement

14

Notes to the Cash Flow Statement

15

Notes to the Financial Statements

16

to

25

Director:

N Mcpartland

Registered office:

21-25 Reform Street

Dundee

DD1 1SG

Registered number:

SC477637 (Scotland)

Auditors:

Cooper Parry Group Limited

Statutory Auditor

1st Floor, Abbey Square

Davidson House, The Forbury

Reading

RG1 3EU

The director presents his strategic report for the year ended 31 December 2024.

Review of business

The company operates six McDonald's franchised restaurants in the Dundee, Forfar and Arbroath areas of Scotland, employing over 650 members of staff.

The lower than expected supply chain inflation across 2024 resulted in gross profit margin above plan. This allowed the company to invest the benefit into value driving initiatives to increase guest counts and sales.

The IEO (Informal Eating Out) and QSR (Quick Service Restaurant) markets have continued to see a decline in customer visits versus 2023, which in turn has led to challenging guest count and sales performance. Despite the challenging backdrop we have launched several trading initiatives to increase footfall in to our restaurants, which have seen strong results and led to market share gains.

Given the direct link between our approach to pricing, the external environment, and our success in relation to our customers, we will continue to remain close to understanding this relationship and look constantly to evaluate how our internal actions are impacting our customers.

During November 2023, there was a fire which destroyed store 1006. Adequate insurance provisions were in place to be able to rebuild the store, which resumed trading in late 2024.

Despite the net current liabilities position the strength of the business remains robust due to the ongoing support from both the franchisor and HSBC providing sufficient overdraft and loan facilities. The directors consider the company to have adequate resources to meet liabilities as they fall due.

Key performance indicators

We consider our key financial performance indicators are those that communicate the financial performance and strength of the company as a whole, including turnover and gross profit margin.

Sales for the year amounted to £24.29 million, an increase of £4.59 million from 2023 giving an overall sales increase of approximately 23.3%. The growth in sales is predominantly due to the acquisition of two stores during July 2024.

The gross profit margin is 60.81% compared to 59.84% in 2023 and is in line with expectations.

Future developments

2024 economic trends are broadly expected to continue into 2025.

In 2025 we anticipate more optimism in the market, partly driven by anticipated interest rate cuts. However, consumer sentiment remains low, as customers continue to feel the impact from the economic environment over recent years. Sales growth will be driven by our ability to meet the increasing demands of our customers, through investing in the customer experience as well as a strong marketing calendar with a continued focus on value and a number of innovative products including the Big Arch.

Our ambition for 2025 and beyond is to continue our sustainable growth of gross profit margin. To support this, we anticipate making menu board price increases in 2025 and any pricing considerations will remain customer led in, with the focus being growing guest counts and sales. This will in turn strengthen gross profit and cash flow, whilst sustainably growing gross profit margin in an attempt to achieve increased margins for Q4 2025. Absolute gross profit margin will vary by store dependent on pricing and product mix amongst other factors.

The 2025 pricing strategy will provide gross profit margin growth by taking more price than supply chain inflation, whilst maintaining the business' core value proposition. The key focus will be on driving sustainable growth by building upon the work which has been implemented on value, opportunities driven by investment in IRLX (In Real Life Experience) and refining the long-term view of pricing and menu architecture.

It is the strategy of the company to carry out store refurbishments projects at regular intervals, under the guidance of McDonald's national store refurbishment program, in order to benefit the customers in store dining experience. The re-imaging strategy continues to have a positive impact on guest counts which in turn powers sales growth in line with directors' expectations and objectives.

Principal risks and uncertainties

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

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

Economic risk

Following some very challenging times, we are optimistic about the economic future. Principal risks are increasing commodity prices, increased utility costs and labour rates adding pressure to margins.

The company's supply chain is closely maintained by McDonald's, who are able to negotiate effectively on behalf of franchisees to ensure enhanced purchasing terms. They have continued to work at mitigating the impact of food and paper inflation with an expectation that circa 30% of our costs will be secured.

This forecast reflects our confidence in the stability of key cost drivers, however, there still remains some uncertainty with geopolitical uncertainty and legislative Impact. Our focus remains on working closely with supplier partners to manage inevitable cost increases.

Regulatory risks

The company's operations demand a high level of compliance within a wide range of regulatory requirements. In particular:

- Health and safety

- Hygiene procedures

- Employment laws

- Licensing

The above, along with a number of other areas, are monitored in detail by McDonald's, as being in the fast food industry brings a high level of regulatory concerns.

Consumer taste

Any material changes in the way the consumer views the fast food industry could have an adverse effect on the company. However, this can also work in the opposite direction and could assist the company to achieve growth. As a result, the company focuses, in detail, on recognising demographic trends, ensuring innovation and the use of the freshest and highest quality products through its stores. The company has strict policies to ensure that all stores are maintaining the McDonald's ethos.

Competitors

The fast food market is a very competitive market, with a high number of large competitors trading in the sector. In order to remain as one of the main players, McDonald's have dedicated teams who focus on ensuring they remain a leading company within the market. This allows them to compete with other large fast food chains.

On behalf of the board:

N Mcpartland - Director

1 October 2025

The director presents his report with the financial statements of the company for the year ended 31 December 2024.

Principal activity

The principal activity of the company in the year under review was that of the operation of McDonald's franchised restaurants.

Dividends

The following interim dividends were paid in the year:

Ordinary A shares

5 April 2024 - £493.33 per share

6 April 2024 - £6.66 per share

Ordinary B shares

5 April 2024 - £1,480.00 per share

6 April 2024 - £20.00 per share

The directors recommend that no final dividends be paid.

The total distribution of dividends for the year ended 31 December 2024 was £75,000 (2023 - £4,000).

Research and development

The company does not carry out any independent research and development. However the franchisor, McDonalds' Restaurants Limited, carries out its own research and development on behalf of all franchisees. The company makes a contribution towards this through its existing payments to the franchisor.

Director

N Mcpartland held office during the whole of the period from 1 January 2024 to the date of this report.

Going concern

The directors have evaluated the company's ability to continue as a going concern, taking into account current economic conditions, industry-wide challenges, and internal financial forecasts. This evaluation included a detailed review of forecasted trading performance and working capital requirements.

As outlined in the Strategic Report, trading conditions remain difficult, compounded by ongoing economic uncertainty in the UK driven by elevated inflation, interest rates, and energy costs. In response, the franchisor introduced a series of commercial initiatives across the franchise network in 2025 aimed at enhancing profitability and cash flow. These measures have led to an improvement in gross profit margins, and the company is forecasting an improved financial position for the year ending 31 December 2025 and beyond.

The directors acknowledge that the company was in a net current liabilities position at the balance sheet date. This was not unexpected as it is common for franchises to take several years to recover their initial investment, and the business model is structured to support long-term growth rather than short-term returns.

Included within creditors due within one year is £3.1 million relating to bank loans. Although these loans are scheduled to be repaid over a period of 5 years, the company was unable to meet the debt service coverage covenant at the balance sheet date. As a result, the loans have been classified as repayable on demand. Nevertheless, the company has fulfilled all scheduled repayments to date, and the bank has not taken any action in response to the covenant breach.

Historically, the bank has remained supportive provided repayments continue as agreed, and the directors are confident that the company has sufficient cash flow to meet its obligations.

An additional £1.5 million of creditors relates to director loans. While there is no formal repayment schedule in place, the directors have confirmed that repayments will only be made if the company can do so without compromising its ability to meet other financial commitments.

The majority of the trade creditor balance of £1.1 million is owed to the franchisor, McDonald's, who has previously demonstrated flexibility and support, including the provision of extended credit terms when necessary.

Considering the continued support from stakeholders and the company's financial forecasts, the directors have a reasonable expectation that the company has adequate resources to continue to operate for at least twelve months from the date of approval of these financial statements and continue to adopt the going concern basis in preparing the financial statements. However, given that there is a material uncertainty surrounding the banks continued support whilst the company remains in breach of its bank covenants, there is a material uncertainty that may cast doubt on the company's ability to continue as a going concern.

Employment of disabled persons

The company operates a policy of giving full & fair consideration to employment applications from disabled persons.

Provision of information to employees

The company has a system for providing employees with information of concern to them. It also consults employees on a regular basis so that their views can be taken into account in making decisions affecting them. It regularly explains to employees the financial and economic factors affecting the performance of the company and makes them aware of the provision of training, career development and employment of disabled employees.

Statement of director's responsibilities

The director is responsible for preparing the Strategic Report, the Report of the Director and the financial statements in accordance with applicable law and regulations.

Company law requires the director to prepare financial statements for each financial year. Under that law the director has elected to prepare the financial statements in accordance with United Kingdom Generally Accepted Accounting Practice (United Kingdom Accounting Standards and applicable law), including Financial Reporting Standard 102 'The Financial Reporting Standard applicable in the UK and Republic of Ireland'. Under company law the director must not approve the financial statements unless he is satisfied that they give a true and fair view of the state of affairs of the company and of the profit or loss of the company for that period. In preparing these financial statements, the director is required to:

-	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 director is responsible for keeping adequate accounting records that are sufficient to show and explain the company's transactions and disclose with reasonable accuracy at any time the financial position of the company and enable him to ensure that the financial statements comply with the Companies Act 2006. He is also responsible for safeguarding the assets of the company and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.

Statement as to disclosure of information to auditors

So far as the director is aware, there is no relevant audit information (as defined by Section 418 of the Companies Act 2006) of which the company's auditors are unaware, and he has taken all the steps that he ought to have taken as a director in order to make himself aware of any relevant audit information and to establish that the company's auditors are aware of that information.

Auditors

The auditors, Cooper Parry Group Limited, are deemed re-appointed under Section 487(2) of the Companies Act 2006.

On behalf of the board:

N Mcpartland - Director

1 October 2025

Opinion

We have audited the financial statements of Altea 4 Restaurants Ltd (the 'company') for the year ended 31 December 2024 which comprise the Income Statement, Other Comprehensive Income, Balance Sheet, Statement of Changes in Equity, Cash Flow Statement and Notes to the Cash Flow Statement, 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 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.

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 Auditors' responsibilities for the audit of the financial statements section of our report. We are independent of the company in accordance with the ethical requirements that are relevant to our audit of the financial statements in the UK, including the FRC's Ethical Standard, and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

Material uncertainty relating to going concern

We draw attention to Note 2 in the financial statements, which indicates that the company was in breach of its loan covenants as at 31 December 2024. As stated in Note 2, these events or conditions, along with other matters as set forth in Note 2, indicate that a material uncertainty exists that may cast significant doubt on the company's ability to continue as a going concern. Our opinion is not modified in respect of this matter.

In auditing the financial statements, we have concluded that the directors' use of the going concern basis of accounting in the preparation of the financial statements is appropriate.

Our responsibilities and the responsibilities of the directors with respect to going concern are described in the relevant sections of this report.

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 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 the audit:

-	the information given in the Strategic Report and the Report of the Director for the financial year for which the financial statements are prepared is consistent with the financial statements; and

-	the Strategic Report and the Report of the Director have 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 Report of the Director.

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 returns; or

-	certain disclosures of director's remuneration specified by law are not made; or

-	we have not received all the information and explanations we require for our audit.

Responsibilities of director

As explained more fully in the Statement of Director's Responsibilities set out on page five, the director is responsible for the preparation of the financial statements and for being satisfied that they give a true and fair view, and for such internal control as the director determines necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.

In preparing the financial statements, the director is responsible for assessing the company's ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the director either intends to liquidate the company or to cease operations, or has no realistic alternative but to do so.

Auditors' responsibilities for the audit of the financial statements

Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor's report that includes our opinion. Reasonable assurance is a high level of assurance but is not a guarantee that an audit conducted in accordance with ISAs (UK) will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements.

Irregularities, including fraud, are instances of non-compliance with laws and regulations. We design procedures in line with our responsibilities, outlined above, to detect material misstatements in respect of irregularities, including fraud. The extent to which our procedures are capable of detecting irregularities, including fraud is detailed below.

We gained an understanding of the legal and regulatory framework applicable to the company and the industry in which it operates and considered the risk of acts by the company that were contrary to applicable laws and regulations, including fraud. We discussed amongst the audit team the identified laws and regulations and remained alert to any indications of non-compliance.

Based on our understanding of the industry, we identified that the principal risks of non-compliance with laws and regulations related to breaches of health and safety, including food hygiene. We considered the extent to which non-compliance with these laws and regulations might have a material effect on the financial statements.

We also considered those laws and regulations that have a direct impact on the preparation of the financial statements, such as the Companies Act 2006 and UK tax legislation.

Our procedures in relation to fraud, included but were not limited to: inquiries of management whether they have any knowledge of any actual, suspected or alleged fraud, and discussions amongst the audit team regarding risk of fraud such as opportunities for fraudulent manipulation of financial statements. We determined that the principal risks related to posting manual journal entries to manipulate financial performance and management bias through judgements in accounting estimates and challenged the assumptions and judgements made by management in its significant accounting estimates. We also addressed the risk of management override of internal controls, including testing journals and evaluating whether there was evidence of bias by the directors that represented a risk of material misstatement due to fraud. Our tests included agreeing the financial statement disclosures to underlying supporting documentation.

Because of the inherent limitations of an audit, there is a risk that we will not detect all irregularities, including those leading to a material misstatement in the financial statements or non-compliance with regulation. This risk increases the more that compliance with law or regulation is removed from the events and transactions reflected in the financial statements, as we will be less likely to become aware of instances of non-compliance. The risk is also greater regarding irregularities occurring due to fraud rather than error, as fraud involves intentional concealment, forgery, collusion, omission or misrepresentation.

In assessing the potential risks of material misstatement we obtained an understanding of; the entities operations, including the nature of its revenue sources and services and of its objectives and strategies to understand the classes of transactions, account balances, expected financial statement disclosures and business risks that may result in risks of material misstatement.

A further description of our responsibilities for the audit of the financial statements is located on the Financial Reporting Council's website at www.frc.org.uk/auditorsresponsibilities. This description forms part of our Report of the Auditors.

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 a Report of the Auditors 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.

Azfar Doshi (Senior Statutory Auditor)

for and on behalf of Cooper Parry Group Limited

Statutory Auditor

1st Floor, Abbey Square

Davidson House, The Forbury

Reading

RG1 3EU

2 October 2025

Turnover

3

24,287,728

19,697,928

Cost of sales

(9,488,765

)

(7,909,840

)

Gross profit

14,798,963

11,788,088

Administrative expenses

(14,055,424

)

(11,982,480

)

743,539

(194,392

)

Other operating income

657,763

-

Operating profit/(loss)

5

1,401,302

(194,392

)

Interest receivable and similar income

4,064

5,791

1,405,366

(188,601

)

Interest payable and similar expenses

6

(187,742

)

(124,648

)

Profit/(loss) before taxation

1,217,624

(313,249

)

Tax on profit/(loss)

7

(145,609

)

100,256

Profit/(loss) for the financial year

1,072,015

(212,993

)

Profit/(loss) for the year

1,072,015

(212,993

)

Other comprehensive income

-

-

Total comprehensive income/(loss) for the year

1,072,015

(212,993

)

Fixed assets

Intangible assets

9

4,188,874

2,483,056

Tangible assets

10

2,896,007

1,896,997

Investments

11

7,500

5,000

7,092,381

4,385,053

Current assets

Stocks

12

154,060

84,068

Debtors

13

682,705

181,133

Cash at bank and in hand

789,250

535,119

1,626,015

800,320

Creditors

Amounts falling due within one year

14

6,132,639

3,584,699

Net current liabilities

(4,506,624

)

(2,784,379

)

Total assets less current liabilities

2,585,757

1,600,674

Creditors

Amounts falling due after more than one year

15

(1,500,000

)

(1,657,541

)

Provisions for liabilities

19

(251,748

)

(106,139

)

Net assets/(liabilities)

834,009

(163,006

)

Capital and reserves

Called up share capital

20

1

1

Retained earnings

21

834,008

(163,007

)

Shareholders' funds

834,009

(163,006

)

The financial statements were approved by the director and authorised for issue on 1 October 2025 and were signed by:

N Mcpartland - Director

Called up

share

Retained

Total

capital

earnings

equity

£

£

£

Balance at 1 January 2023

1

53,986

53,987

Changes in equity

Dividends

-

(4,000

)

(4,000

)

Total comprehensive loss

-

(212,993

)

(212,993

)

Balance at 31 December 2023

1

(163,007

)

(163,006

)

Changes in equity

Dividends

-

(75,000

)

(75,000

)

Total comprehensive income

-

1,072,015

1,072,015

Balance at 31 December 2024

1

834,008

834,009

Cash flows from operating activities

Cash generated from operations

1

877,946

1,840,817

Interest paid

(187,742

)

(124,648

)

Tax paid

(12,175

)

(793

)

Net cash from operating activities

678,029

1,715,376

Cash flows from investing activities

Purchase of intangible fixed assets

(1,902,991

)

-

Purchase of tangible fixed assets

(1,499,866

)

(1,250,842

)

Purchase of fixed asset investments

(2,500

)

-

Sale of tangible fixed assets

758,495

177,317

Interest received

4,064

5,791

Net cash from investing activities

(2,642,798

)

(1,067,734

)

Cash flows from financing activities

New loans in year

3,300,000

-

Loan repayments in year

(505,012

)

(385,174

)

Amount introduced by directors

175,000

49,000

Amount withdrawn by directors

(354,614

)

(492,178

)

Equity dividends paid

(75,000

)

(4,000

)

Net cash from financing activities

2,540,374

(832,352

)

Increase/(decrease) in cash and cash equivalents

575,605

(184,710

)

Cash and cash equivalents at beginning of year

2

213,645

398,355

Cash and cash equivalents at end of year

2

789,250

213,645

1.	Reconciliation of profit/(loss) before taxation to cash generated from operations

2024

2023

£

£

Profit/(loss) before taxation

1,217,624

(313,249

)

Depreciation charges

698,030

765,414

Profit on disposal of fixed assets

(758,495

)

-

Finance costs

187,742

124,648

Finance income

(4,064

)

(5,791

)

1,340,837

571,022

Increase in stocks

(69,992

)

(8,436

)

Increase in trade and other debtors

(489,397

)

(39,154

)

Increase in trade and other creditors

96,498

1,317,385

Cash generated from operations

877,946

1,840,817

2.	Cash and cash equivalents

The amounts disclosed on the Cash Flow Statement in respect of cash and cash equivalents are in respect of these Balance Sheet amounts:

Year ended 31 December 2024

31/12/24

1/1/24

£

£

Cash and cash equivalents

789,250

535,119

Bank overdrafts

-

(321,474

)

789,250

213,645

Year ended 31 December 2023

31/12/23

1/1/23

£

£

Cash and cash equivalents

535,119

556,149

Bank overdrafts

(321,474

)

(157,794

)

213,645

398,355

3.	Analysis of changes in net debt

At 1/1/24

Cash flow

At 31/12/24

£

£

£

Net cash

Cash at bank and in hand

535,119

254,131

789,250

Bank overdrafts

(321,474

)

321,474

-

213,645

575,605

789,250

Debt

Debts falling due within 1 year

(259,659

)

(2,852,530

)

(3,112,189

)

Debts falling due after 1 year

(57,541

)

57,541

-

(317,200

)

(2,794,989

)

(3,112,189

)

Total

(103,555

)

(2,219,384

)

(2,322,939

)

1.	Statutory information

Altea 4 Restaurants Ltd is a private company, limited by shares , registered in Scotland. The company's registered number and registered office address can be found on the Company Information page.

The presentation currency of the financial statements is the Pound Sterling (£).

2.	Accounting policies

Basis of preparing the financial statements

These financial statements have been prepared in accordance with Financial Reporting Standard 102 "The Financial Reporting Standard applicable in the UK and Republic of Ireland" and the Companies Act 2006. The financial statements have been prepared under the historical cost convention.

Going concern

The directors have evaluated the company's ability to continue as a going concern, taking into account current economic conditions, industry-wide challenges, and internal financial forecasts. This evaluation included a detailed review of forecasted trading performance and working capital requirements.

As outlined in the Strategic Report, trading conditions remain difficult, compounded by ongoing economic uncertainty in the UK driven by elevated inflation, interest rates, and energy costs. In response, the franchisor introduced a series of commercial initiatives across the franchise network in 2025 aimed at enhancing profitability and cash flow. These measures have led to an improvement in gross profit margins, and the company is forecasting an improved financial position for the year ending 31 December 2025 and beyond.

The directors acknowledge that the company was in a net current liabilities position at the balance sheet date. This was not unexpected as it is common for franchises to take several years to recover their initial investment, and the business model is structured to support long-term growth rather than short-term returns.

Included within creditors due within one year is £3.1 million relating to bank loans. Although these loans are scheduled to be repaid over a period of 5 years, the company was unable to meet the debt service coverage covenant at the balance sheet date. As a result, the loans have been classified as repayable on demand. Nevertheless, the company has fulfilled all scheduled repayments to date, and the bank has not taken any action in response to the covenant breach.

Historically, the bank has remained supportive provided repayments continue as agreed, and the directors are confident that the company has sufficient cash flow to meet its obligations.

An additional £1.5 million of creditors relates to director loans. While there is no formal repayment schedule in place, the directors have confirmed that repayments will only be made if the company can do so without compromising its ability to meet other financial commitments.

The majority of the trade creditor balance of £1.1 million is owed to the franchisor, McDonald's, who has previously demonstrated flexibility and support, including the provision of extended credit terms when necessary.

Considering the continued support from stakeholders and the company's financial forecasts, the directors have a reasonable expectation that the company has adequate resources to continue to operate for at least twelve months from the date of approval of these financial statements and continue to adopt the going concern basis in preparing the financial statements. However, given that there is a material uncertainty surrounding the banks continued support whilst the company remains in breach of its bank covenants, there is a material uncertainty that may cast doubt on the company's ability to continue as a going concern.

Turnover

Turnover is measured at the fair value of the consideration received or receivable, excluding discounts, rebates, value added tax and other sales taxes.

Revenue from the sale of goods is recognised when the significant risks and rewards of ownership of the goods have transferred to the buyer, usually at the point of sale, the amount of revenue can be reliably measured, 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 reliably measured.

Intangible assets

Franchise rights and fees are initially recognised at cost and are subsequently measured at costs less accumulated amortisation and impairment losses. They are amortised evenly over their useful lives, which is taken as the term specified in the franchise agreements.

Tangible fixed assets

Tangible fixed assets are initially recorded at cost and subsequently stated at cost less any accumulated depreciation and impairment losses.

Depreciation is provided at the following annual rates in order to write off each asset over its estimated useful life.

Short leasehold

- 5% on cost

Restaurant equipment

- at varying rates on cost

Fixtures and fittings

- at varying rates on cost

Stocks

Stocks are valued at the lower of cost and net realisable value, after making due allowance for obsolete and slow moving items.

Cash at bank and in hand

Cash at bank and in hand are basic financial assets comprising of cash in hand, demand deposits with bank, other short-term liquid investments with original maturities of three months or less and bank overdrafts. Bank overdrafts are shown within current liabilities.

Taxation

Taxation for the year comprises current and deferred tax. Tax is recognised in the Income Statement, except to the extent that it relates to items recognised in other comprehensive income or directly in equity.

Current or deferred taxation assets and liabilities are not discounted.

Current tax is recognised at the amount of tax payable using the tax rates and laws that have been enacted or substantively enacted by the balance sheet date.

Deferred tax

Deferred tax is recognised in respect of all timing differences that have originated but not reversed at the balance sheet date.

Timing differences arise from the inclusion of income and expenses in tax assessments in periods different from those in which they are recognised in financial statements. Deferred tax is measured using tax rates and laws that have been enacted or substantively enacted by the year end and that are expected to apply to the reversal of the timing difference.

Unrelieved tax losses and other deferred tax assets are recognised only to the extent that it is probable that they will be recovered against the reversal of deferred tax liabilities or other future taxable profits.

Operating lease commitments

Rentals paid under operating leases are charged to profit or loss on a straight line basis over the period of the lease.

Pension costs and other post-retirement benefits

The company operates a defined contribution pension scheme. Contributions payable to the company's pension scheme are charged to profit or loss in the period to which they relate.

Impairment of fixed assets

At each reporting end date, the company reviews the carrying amounts of its tangible and intangible assets to determine whether there is any indication that those assets have suffered an impairment loss. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment loss (if any). Where it is not possible to estimate the recoverable amount of an individual asset, the company estimates the recoverable amount of the cash-generating unit to which the asset belongs.

Recoverable amount is the higher of fair value less costs to sell and value in use. In assessing value in use, the estimated cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to each asset for which the estimates of future cash flows have not been adjusted.

If the recoverable amount of an asset (or cash-generating unit) is estimated to be less than its carrying amount, the carrying amount of the asset (or cash-generating unit) is reduced to its recoverable amount. An impairment loss is recognised immediately in profit or loss, unless the relevant asset is carried at a revalued amount, in which case the impairment loss is treated as a revaluation decrease.

Recognised impairment losses are reversed if, and only if, the reasons for the impairment loss have ceased to apply. Where an impairment loss subsequently reverses, the carrying amount of the asset (or cash-generating unit) is increased to the revised estimate of its recoverable amount, but so that the increased carrying amount does not exceed the carrying amount that would have been determined had no impairment loss been recognised for the asset (or cash-generating unit) in prior years. A reversal of an impairment loss is recognised immediately in profit or loss, unless the relevant asset is carried at a revalued amount, in which case the reversal of the impairment loss is treated as a revaluation increase.

Holiday pay accrual

A liability is recognised to the extent of any unused holiday pay entitlement which is accrued at the Balance Sheet date and carried forward to future periods. This is measured at the undiscounted cost of the future holiday entitlement so accrued at the Balance Sheet date.

Financial Instruments

The Company only enters into basic financial instruments that result in the recognition of financial assets and liabilities like trade and other debtors and creditors, loans from banks and other third parties, loans to related parties and investments in non-puttable ordinary shares.

For financial assets measured at amortised cost, the impairment cost is measured at the difference between an asset's carrying amount and the present value of estimated cash flows discounted at the assets effective interest rate. If the financial asset has a variable interest rate, the discount rate for measuring any impairment loss is the current effective interest rate determined under the contract.

For assets measured at cost less impairment, the impairment loss is measured as the difference between an asset's carrying amount and best estimate, which is an approximation of the amount that the Company would receive for the asset if it were to be sold at the balance sheet date.

Creditors

Short term creditors are measured at the transaction price. Other financial liabilities, including bank loans, are measured initially at fair value, net of transaction costs, and are measured subsequently at amortised cost using the effective interest method.

Finance costs

Finance costs are charged to the Profit and Loss Account over the term of the debt using the effective interest method so that the amount charged is at a constant rate on the carrying amount. Issue costs are initially recognised as a reduction in the proceeds of the associated capital instrument.

Finance income

Finance income is recognised in the Profit and Loss Account using the effective interest method.

Other income

Other income is recognised when it is probable that economic benefits will flow to the company and the amount can be measured reliably. Income is recognised in the period which it relates, provided it can be measured with reasonable certainty.

Dividends

Equity dividends are recognised when they legally become payable. Interim equity dividends are recognised when paid. Final equity dividends are recognised when approved by the shareholders at an annual general meeting.

Judgements in applying accounting policies and key sources of estimation uncertainty

In the process of applying the company's accounting policies, management are required to make certain estimates and judgements. The key estimates and judgements are as follows:

Depreciation, amortisation and residual values

The director has reviewed the asset lives and associated residual values of all fixed asset classes and has concluded that asset lives and residual values are appropriate.

Impairment of fixed assets

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.

Holiday pay accrual

A liability is recognised to the extent of any unused holiday pay entitlement which is accrued at the Balance Sheet date and carried forward to future periods. This is measured at the undiscounted cost of the future holiday entitlement so accrued at the Balance Sheet date.

3.

Turnover

The turnover and profit (2023 - loss) before taxation are attributable to the one principal activity of the company.

An analysis of turnover by class of business is given below:

2024

2023

£

£

Food

23,734,319

19,318,785

Non product

553,409

379,143

24,287,728

19,697,928

The whole of turnover is derived from the United Kingdom.

4.	Employees and directors

2024

2023

£

£

Wages and salaries

7,019,918

5,513,507

Social security costs

318,225

253,756

Other pension costs

97,071

69,741

7,435,214

5,837,004

The average number of employees during the year was as follows:

2024

2023

Crew labour

640

517

Management labour

25

21

665

538