BUZZWORKS_HOLDINGS_GROUP_ - Accounts

The directors present the strategic report for the year ended 3 May 2020.

The principal activities of the group are the operation and management of restaurants and bars in Scotland.

As part of the growth strategy, the group continued to open new venues and invest in refurbishing the current estate.

In light of the current market conditions and the impact COVID 19 had on the Hospitality sector, the directors are pleased with the underlying trading results over the last 12 months.

Over the 53 weeks to 3rd May 2020 revenues remained static at £18.5m (2019 - £18.4m), revenue came in £2.5m under expectation due to COVID 19 with a forced closure of the business on the 20th March 2020. Underlying EBITDA, before site opening costs of £260k and non-recurring items of £1.2m, was £1.37m (2019 - £1.62m).

Out-with the impact COVID 19 has had on the financial performance, the Group is experiencing continued external pressure with increased property costs and the impact on rate of pay from National Minimum Wage and National Living Wage, however the Directors are pleased that our cost base is being well controlled. The blended margin; salaries and overhead costs generally came in line with expectation.

In the last year the business continued to invest significantly in new and existing venues. The refurbishment of our Elliots venue into the new Vics & the Vine bar restaurant was completed and opened in early May 19 showing strong return on investment. The opening of the Duke, in Kilmarnock, followed in January 20. Due to COVID 19 the planned opening of our venue in Linlithgow was postponed and is due to open early summer 2021.

The business continues to invest in people through our excellent training program which supports our succession pipeline in developing our leaders of the future. Further investment has been made in our central team including a Food Director to further support our food strategy. The directors believe that although, in the short term, this investment impacts profitability it is essential for the planned growth of the business and will have a long lasting positive effect on the future of the expanded business. The directors are pleased to report that, for the fifth year running, the business is one of the Sunday Times 100 Best Companies to Work For in the UK.

The group has bank loans and is exposed to any changes in interest rates.

In the current economic and political climate, there is a risk of suppliers passing on further costs due to a combination of currency fluctuations and uncertainty, product supply and consumer trends and behaviours.

The impact of COVID 19 on our industry has been severe and with continued short and long-term circuit break closures, there is a risk to the liquidity of the business. Due to ongoing management of our liquidity position, support from our bank, key suppliers and additional government funding we will be able to sustain the business throughout the crisis and take advantage of opportunities that support our growth strategy going forward.

The directors continually monitor the following KPIs, sales trend; gross margin (food and beverage); labour costs along with underlying venue EBITDA. Non-financial KPIs are also monitored including, service quality; product quality and others relating to staffing being labour efficiencies; staff turnover and sickness.

The directors continue to seek improvements in the financial performance of the business through increasing sales, strong cost controls and an infrastructure that supports growth. The business will continue to invest any future cash generated into the current estate and to open further new venues as opportunities arise.

The downtime during the pandemic has been used to review company strategy, processes and efficiencies to make positive changes which will give our business a strong base for moving forward out of the crisis.

With the exception of the pandemic, the directors are unaware, at the report date, of any change in activities in the forthcoming year.

On behalf of the board

The directors present their annual report and financial statements the 53 week year ended 3 May 2020. The comparative was for the 52 week Period ended 28 April 2019.

The principal activity of the company is that of a holding company. The principal activity of the group is that of the operation of licensed premises.

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

The results for the year are set out on page 8.

No ordinary dividends were paid and the directors do not recommend payment of a dividend.

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

The group's policy is to consult and discuss with employees, through meetings, matters likely to affect employees' interests.

Information of matters of concern to employees is given through these meetings and reports which seek to achieve a common awareness on the part of employees of the financial and economic factors affecting the group's performance.

The auditor, Johnston Carmichael LLP, is deemed to be reappointed under section 487(2) of the Companies Act 2006.

The directors are responsible for preparing the Annual 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 group and company, and of the profit or loss of the group 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;

•     state whether applicable UK Accounting Standards have been followed, subject to any material departures disclosed and explained in the financial statements;

•     prepare the financial statements on the going concern basis unless it is inappropriate to presume that the company will continue in business.

The directors are responsible for keeping adequate accounting records that are sufficient to show and explain the group’s and company’s transactions and disclose with reasonable accuracy at any time the financial position of the group and 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 group and company and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.

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 auditor of the company 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 auditor of the company is aware of that information.

We have audited the financial statements of Buzzworks Holdings Group Limited (the 'parent company') and its subsidiaries (the 'group') for the year ended 3 May 2020 which comprise the Group Profit and Loss Account, Group Statement of Comprehensive Income, Group Balance Sheet, Company Balance Sheet, Group Statement of Changes in Equity, Company Statement of Changes in Equity, Group Statement of Cash Flows and notes to the financial statements, including a summary of significant accounting policies. The financial reporting framework that has been applied in their preparation is applicable law and United Kingdom Accounting Standards, including 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 group's and the parent company's affairs as at 3 May 2020 and of the group's loss for the year then ended;

•     have been properly prepared in accordance with United Kingdom Generally Accepted Accounting Practice; and

•     have been prepared in accordance with the requirements of the Companies Act 2006.

Basis for opinion

We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and applicable law. Our responsibilities under those standards are further described in the Auditor's responsibilities for the audit of the financial statements section of our report. We are independent of the group 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

We have nothing to report in respect of the following matters in relation to which the ISAs (UK) require us to report to you where:

• the directors' use of the going concern basis of accounting in the preparation of the financial statements is not appropriate; or

• the directors have not disclosed in the financial statements any identified material uncertainties that may cast significant doubt about the group's or the parent company’s ability to continue to adopt the going concern basis of accounting for a period of at least twelve months from the date when the financial statements are authorised for issue.

Other information

The directors are responsible for the other information. The other information comprises the information included in the annual report, other than the financial statements and our auditor’s report thereon. Our opinion on the financial statements does not cover the other information and, except to the extent otherwise explicitly stated in our report, we do not express any form of assurance conclusion thereon.

In connection with our audit of the financial statements, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the audit or otherwise appears to be materially misstated. If we identify such material inconsistencies or apparent material misstatements, we are required to determine whether there is a material misstatement in the financial statements or a material misstatement of the other information. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact.

We have nothing to report in this regard.

Opinions on other matters prescribed by the Companies Act 2006

In our opinion, based on the work undertaken in the course of 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.

In the light of the knowledge and understanding of the group and the parent 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 by the parent company, or returns adequate for our audit have not been received from branches not visited by us; or

• the parent company 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.

As explained more fully in the directors' responsibilities statement, the directors are responsible for the preparation of the financial statements and for being satisfied that they give a true and fair view, and for such internal control as the directors determine is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.

In preparing the financial statements, the directors are responsible for assessing the group's and the parent 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 group or the parent company or to cease operations, or have no realistic alternative but to do so.

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.

As part of an audit in accordance with ISAs (UK), we exercise professional judgment and maintain professional scepticism throughout the audit. We also:

• Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.

• Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the group’s internal control.

• Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by the directors.

• Conclude on the appropriateness of the directors' use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the group’s or the parent company’s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor’s report to the related disclosures in the financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor’s report. However, future events or conditions may cause the group or the parent company to cease to continue as a going concern.

• Evaluate the overall presentation, structure and content of the financial statements, including the disclosures, and whether the financial statements represent the underlying transactions and events in a manner that achieves fair presentation.

• Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business activities within the group to express an opinion on the consolidated financial statements. We are responsible for the direction, supervision and performance of the group audit. We remain solely responsible for our audit opinion.

We communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit.

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

As permitted by s408 Companies Act 2006, the company has not presented its own profit and loss account and related notes. The company’s profit for the year was £nil.

Buzzworks Holdings Group Limited ("the company") is a private limited company domiciled and incorporated in Scotland. The registered office is Grange House, 34 Grange Street, Kilmarnock, Ayrshire, Scotland, KA1 2DD.

The group consists of Buzzworks Holdings Group Limited and all of its subsidiaries.

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, modified to include the revaluation of freehold and leasehold properties. The principal accounting policies adopted are set out below.

As permitted by s408 Companies Act 2006, the company has not presented its own profit and loss account and related notes. The company's profit for the year was £nil.

The consolidated financial statements incorporate those of Buzzworks Holdings Group Limited and all of its subsidiaries (i.e. entities that the Group controls through its power to govern the financial and operating policies so as to obtain economic benefits). All financial statements are made up to 28 April 2019.

All intra-group transactions, balances and unrealised gains on transactions between group companies are eliminated on consolidation. Unrealised losses are also eliminated unless the transaction provides evidence of an impairment of the asset transferred.

Where necessary, adjustments are made to the financial statements of subsidiaries to bring the accounting policies used into line with those used by other members of the Group.

The cost of a business combination is the fair value at the acquisition date of the assets given, equity instruments issued and liabilities incurred or assumed, plus costs directly attributable to the business combination. The excess of the cost of a business combination over the fair value of the identifiable assets, liabilities and contingent liabilities acquired is recognised as goodwill.

On 4 April 2017, the group carried out a restructuring which included the introduction of a new parent holding company, Buzzworks Holdings Group (previously Newco Holdings 2), which acquired the entire share capital of Buzzworks Holdings Limited by way of a share for share exchange. Given the consideration was wholly a share for share exchange and the rights of each shareholder relative to the other have remained the same, compliance with the Companies Act 2016 and FRS 102 section 19 allows the restructuring to be accounted for as a merger.

As part of that restructuring, Buzzworks Property Limited was disposed of by Buzzworks Holdings Limited for nil consideration.  The net assets of Buzzworks Property Limited at the time of the restructuring were shown as a distribution by the group.  While this presentation represents a departure from the requirements of FRS 102, the directors are of the opinion that it is necessary for the financial statements to give a true and fair view.

Management have considered the consequences of COVID-19 and other events and conditions, and although COVID-19 has had an impact on the industry overall, it has been determined that this doesn’t cast significant doubt upon the group’s ability to continue as a going concern.

Covid-19 has had an impact on the current year’s profitability and net liabilities position and it is foreseen that the pandemic will continue to impact the short-term future performance of the business, however management are confident after reviewing short-term and longer term projections, cashflows and funding opportunities that the group can continue as a going concern.

Turnover in respect of sales of food and drink is recognised at the point of sale, and is shown net of VAT and other sales related taxes.

Goodwill represents the excess of the cost of acquisition of a business over the fair value of net assets 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.

Tangible fixed assets are initially measured at cost and subsequently measured at cost or valuation, net of depreciation and any impairment losses.

Depreciation is recognised so as to write off the cost or valuation of assets less their residual values over their useful lives on the following bases:

The group has adopted a policy of not depreciating land and buildings. The directors believe that estimated residual values are not materially different from carrying amounts. Land and buildings are therefore re-valued regularly.

Although this accounting policy is in accordance with the applicable accounting standards, it is a departure from the general requirement of the Companies Act 2006 for all tangible assets to be depreciated. In the opinion of the directors, compliance with the standard is necessary for the financial statements to give a true and fair view. Depreciation or amortisation is only one of many factors reflected in valuation and the amount of this which might otherwise have been charged cannot be separately identified or quantified.

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 recognised in the profit and loss account.

Equity investments are measured at cost less impairment.

In the parent company financial statements, investments in subsidiaries are initially measured at cost and subsequently measured at cost less any accumulated impairment losses.

A subsidiary is an entity controlled by the group. Control is the power to govern the financial and operating policies of the entity so as to obtain benefits from its activities.

At each reporting period end date, the group 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.

The carrying amount of the investments accounted for using the equity method is tested for impairment as a single asset. Any goodwill included in the carrying amount of the investment is not tested separately for impairment.

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

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

Stocks are stated at the lower of cost and estimated selling price less costs to complete and sell. Cost comprises direct materials and, where applicable, direct labour costs and those overheads that have been incurred in bringing the stocks to their present location and condition.

Stocks held for distribution at no or nominal consideration are measured at the lower of replacement cost and cost, adjusted where applicable for any loss of service potential.

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.

Cash at bank and in hand 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.

The group 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 group's balance sheet when the group becomes party to the contractual provisions of the instrument.

Financial assets and liabilities are offset and 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, which include debtors and cash and bank balances, are initially measured at transaction price including transaction costs and are subsequently carried at amortised cost using the effective interest method unless the arrangement constitutes a financing transaction, where the transaction is measured at the present value of the future receipts discounted at a market rate of interest. Financial assets classified as receivable within one year are not amortised.

Financial assets, other than those held at fair value through profit and loss, are assessed for indicators of impairment at each reporting end date.

Financial assets are impaired where there is objective evidence that, as a result of one or more events that occurred after the initial recognition of the financial asset, the estimated future cash flows have been affected. If an asset is impaired, the impairment loss is the difference between the carrying amount and the present value of the estimated cash flows discounted at the asset’s original effective interest rate. The impairment loss is recognised in profit or loss.

If there is a decrease in the impairment loss arising from an event occurring after the impairment was recognised, the impairment is reversed. The reversal is such that the current carrying amount does not exceed what the carrying amount would have been, had the impairment not previously been recognised. The impairment reversal is recognised in profit or loss.

Financial assets are derecognised only when the contractual rights to the cash flows from the asset expire or are settled, or when the group 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.

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 group after deducting all of its liabilities.

Basic financial liabilities

Basic financial liabilities, including creditors, bank loans, loans from fellow group companies and preference shares that are classified as debt, are initially recognised at transaction price unless the arrangement constitutes a financing transaction, where the debt instrument is measured at the present value of the future payments discounted at a market rate of interest. Financial liabilities classified as payable within one year are not amortised.

Debt instruments are subsequently carried at amortised cost, using the effective interest rate method.

Trade creditors are obligations to pay for goods or services that have been acquired in the ordinary course of business from suppliers. Amounts payable are classified as current liabilities if payment is due within one year or less. If not, they are presented as non-current liabilities. Trade creditors are recognised initially at transaction price and subsequently measured at amortised cost using the effective interest method.

Financial liabilities are derecognised when the group's contractual obligations expire or are discharged or cancelled.

Equity instruments issued by the group 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 group.

The tax expense represents the sum of the tax currently payable and deferred tax.

The tax currently payable is based on taxable profit for the year. Taxable profit differs from net profit as reported in the profit and loss account because it excludes items of income or expense that are taxable or deductible in other years and it further excludes items that are never taxable or deductible. The group’s liability for current tax is calculated using tax rates that have been enacted or substantively enacted by the reporting end date.

Deferred tax liabilities are generally recognised for all timing differences and deferred tax assets are recognised to the extent that it is probable that they will be recovered against the reversal of deferred tax liabilities or other future taxable profits. Such assets and liabilities are not recognised if the timing difference arises from goodwill or from the initial recognition of other assets and liabilities in a transaction that affects neither the tax profit nor the accounting profit.

The carrying amount of deferred tax assets is reviewed at each reporting end date and reduced to the extent that it is no longer probable that sufficient taxable profits will be available to allow all or part of the asset to be recovered. Deferred tax is calculated at the tax rates that are expected to apply in the period when the liability is settled or the asset is realised. Deferred tax is charged or credited in the profit and loss account, except when it relates to items charged or credited directly to equity, in which case the deferred tax is also dealt with in equity. Deferred tax assets and liabilities are offset if, and only if, there is 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.

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.

Payments to defined contribution retirement benefit schemes are charged as an expense as they fall due.

Leases are classified as finance leases whenever the terms of the lease transfer substantially all the risks and rewards of ownership to the lessees. All other leases are classified as operating leases.

Assets held under finance leases are recognised as assets at the lower of the assets fair value at the date of inception and the present value of the minimum lease payments. The related liability is included in the balance sheet as a finance lease obligation. Lease payments are treated as consisting of capital and interest elements. The interest is charged to the profit and loss account so as to produce a constant periodic rate of interest on the remaining balance of the liability.

Rentals payable under operating leases, including any lease incentives received, are charged to income 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 lease asset are consumed.

Rental income from operating leases is recognised on a straight line basis over the term of the relevant lease. Initial direct costs incurred in negotiating and arranging an operating lease are added to the carrying amount of the leased asset and recognised on a straight line basis over the lease term.

Government grants are recognised at the fair value of the asset received or receivable when there is reasonable assurance that the grant conditions will be met and the grants will be received.

A grant that specifies performance conditions is recognised in income when the performance conditions are met. Where a grant does not specify performance conditions it is recognised in income when the proceeds are received or receivable. A grant received before the recognition criteria are satisfied is recognised as a liability.

Employee Benefit Trusts

Trusts have been established for the benefit of group employees and certain of their dependents. Monies held in these trusts are held by independent trustees and managed at their discretion.

Where the group retains future economic benefit from, and has de facto control of, the assets and liabilities of the trusts, they are accounted for as assets and liabilities of the group until the earlier of the date that an allocation of trust funds to employees in respect of past services is declared and the date that assets of the trust vest in identified individuals.

Where monies held in a trust are determined by the group on the basis of employees' past services to the business and the group can obtain no future economic benefit from these monies, such monies, whether in the trust or accrued for by the group, are charged to the profit and loss account in the period to which they relate.

Employer Financed Retirement Benefit Schemes (EFRBS)

The group has, in previous accounting periods, made contributions to an employer financed retirement benefit scheme for the benefit of its officers, employees and their wider families, The Buzzworks Leisure Limited 2011 EFRBS ("the Scheme").

In accordance with FRS 102, the group does not include the assets and liabilities of the Scheme on its balance sheet to the extent that it considers that it will not retain any future economic benefit from the assets of the Scheme and will not have control of the rights or other access to those future economic benefits.

In the application of the group’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.

Estimates and judgements are continually evaluated and are based on historical experience and future forecasts that are believed to be reasonable under the circumstances. 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.

The following judgements (apart from those involving estimates) have had the most significant effect on amounts recognised in the financial statements.

Each of the properties are held on the balance sheet at a valuation as determined by management. Management use forecasted EBITDA and a multiplier (based on a multiplier used in the most recent valuation undertaken by an independent surveyor) as a basis in order to determine the fair value of each property. A valuation is carried out annually to ensure that the carrying value of each property remains appropriate. Further information on the revaluation in the current year can be found in note 10.

As outlined in note 14, there are amounts due to the company from related parties and the directors. It is the directors view that these amounts are recoverable.

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.

In order to write-off fixed assets over their useful lifetime, management have to estimate the length of useful life. Management have made use of useful lives which are standard for similar assets in similar businesses, but may not represent the exact length of time which a given asset is used for.

The company make estimates and assumptions concerning the future redemption rate of Gift Cards and Loyalty Points. The provision is based on historical experience of redemption rates.

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

Their aggregate remuneration comprised:

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

In addition to the amount charged to the profit and loss account, the following amounts relating to tax have been recognised directly in other comprehensive income:

The freehold and leasehold properties were valued as fully operational entities having regard to their trading potential at the year end by the directors. The valuations in the financial statements have been updated accordingly.

The company has entered into a series of sale and leaseback agreements, secured on several of the freehold properties. Under the terms of these agreement, the properties are subject to ongoing rental obligations over circa the next 150 years, with the option at the end of each of the lease agreements to repurchase the relevant site for £1. The properties continue to be recognised on balance sheet on a freehold valuation basis to reflect the substance of the transactions.

The net carrying value of tangible fixed assets includes the following in respect of assets held under finance leases or hire purchase contracts.

The assets included in freehold and leasehold property above are held on long term leases as part of the sale and leaseback arrangement in place. No depreciation is charged on these assets.

Details of the company's subsidiaries at 3 May 2020 are as follows:

The registered office of each company named above is Grange House, 34 Grange Street, Kilmarnock, KA1 2DD.

Other loans are technically repayable on demand. S455 tax on directors' loans totals £368,091 (2019 - £257,062).

After the end of the accounting period, the directors of Buzzworks Holdings Group Limited have confirmed that they will not seek repayment in full of the amounts due for at least twelve months from the date of signing the financial statements.

The bank loans and overdrafts are secured by intercompany guarantees between Buzzworks Holdings Limited, Buzzworks Inns Limited and Buzzworks Hospitality Limited, supported generally by bonds and floating charges.

Obligations under finance leases are secured by fixed charges on the assets concerned.

The bank loans and overdrafts are secured by intercompany guarantees between Buzzworks Holdings Limited, Buzzworks Inns Limited and Buzzworks Hospitality Limited, supported generally by bonds and floating charges.

Obligations under finance leases are secured by fixed charges on the assets concerned.

The bank loans and overdrafts are secured by intercompany guarantees between Buzzworks Holdings Limited, Buzzworks Inns Limited and Buzzworks Hospitality Limited, supported generally by bonds and floating charges.

Amounts repayable by instalments are part of a loan to be repaid via monthly repayments over 15 years (180 months). The loan is due to be repaid in full by January 2030. Interest is charged on the loan at the Bank of England base rate plus 2.85%.

Also included is a development loan granted to the group, which is repayable in full in November 2021. During the term of this loan, the group will make annual payments to the lender in respect of the interest accruing on the capital advanced.

Finance lease payments represent rentals payable by the company for certain items of plant and machinery. Leases include purchase options at the end of the lease period, and no restrictions are placed on the use of the assets. All leases are on a fixed repayment basis and no arrangements have been entered into for contingent rental payments.

Finance leases also include the trading properties included in note 10 which are were subject to sale and leaseback transactions. These leases are repayable over 150 years.

Net obligations under finance leases and hire purchase contracts are secured by fixed charges on the assets concerned.

The following are the major deferred tax liabilities and assets recognised by the group and company, and movements thereon:

The deferred tax liability set out above is not expected to reverse within 12 months as it relates to accelerated capital allowances that are not expected to mature within the year and gains on revaluation that are not expected to be realised during the period.

A defined contribution pension scheme is operated for all qualifying employees. The assets of the scheme are held separately from those of the group in an independently administered fund.

The revaluation reserve represents the cumulative balance of unrealised gains on revalued property, plant & equipment.

The merger reserve was created on the acquisition of the group by Buzzworks Holdings Limited in a previous period and relates to the difference in the nominal value of shares issued and the fair value of the assets transferred. This reserve has subsequently increased as a result of the restructuring of the group and the acquisition by Buzzwords Holdings Group Limited.

Profit and loss reserves represent the total of accumulated profit and losses in the current and prior years.

As part of a wider group reorganisation and simplification process, a former group company was placed into liquidation in 2017. While the directors have received legal advice to confirm that there should be no basis for a legal challenge, the liquidator has indicated that he may challenge one part of the group reorganisation process if an unpaid liability arises in the former group company currently in liquidation. A liability may arise in the liquidated company as a result of historic employer pension and trust arrangements and attendant tax liabilities and, as a consequence, there may then be an equal liability on the group up to the amount of £1.3m.

In November 2020, HM Revenue & Customs (“HMRC”) issued assessments to the group and its related parties with regard to potential underpaid tax liabilities. The directors vigorously dispute the quantum and nature of those assessments and discussions concerning their validity continue with HMRC. Accordingly it is not possible to estimate any potential financial impact at this stage.

The directors have undertaken that, if a liability were to arise in the group, where possible, funds will be made available from outside the group, although it is anticipated that any such liabilities would be payable over a period of approximately 7 years.

At the reporting end date the group had outstanding commitments for future minimum lease payments under non-cancellable operating leases, which fall due as follows:

In May 2020 the group received a new £2.2m bank loan as part of the CBILS Covid-19 support scheme.

During the year the group entered into the following transactions with related parties:

The following amounts were outstanding at the reporting end date:

The following amounts were outstanding at the reporting end date:

At the year end £923,448 (2019 - £781,812) was owed by the directors to the group. There were no balances due to or from the company in respect of its directors at 28 April 2019.