Colonel Foods Limited - Limited company accounts 20.1

REGISTERED NUMBER: 05288650 (England and Wales)

STRATEGIC REPORT, REPORT OF THE DIRECTORS AND

FINANCIAL STATEMENTS FOR THE PERIOD 26TH NOVEMBER 2018 TO 29TH DECEMBER 2019

FOR

COLONEL FOODS LIMITED

Page

Company Information

1

Strategic Report

2

Report of the Directors

3

Report of the Independent Auditors

5

Statement of Comprehensive Income

7

Balance Sheet

8

Statement of Changes in Equity

9

Notes to the Financial Statements

10

DIRECTORS:

I Suleman

Z Abbasi

REGISTERED OFFICE:

First Floor

7-8 Conduit Street

London

W1S 2XF

REGISTERED NUMBER:

05288650 (England and Wales)

AUDITORS:

PSJ Alexander & Co

Chartered Accountants & Statutory Auditors

1 Doughty Street

London

WC1N 2PH

The directors present their strategic report for the period 26th November 2018 to 29th December 2019.

REVIEW OF BUSINESS

Turnover increased in the period to £7,405,501 (2018: £6,420,423), mainly due to the KFC supply problems in March 2018 which resulted in restaurant closures for some time in the previous period..

The loss on ordinary activities before taxation has increased to £329,863 (2018: £217,103). The higher loss in the current year was mainly due increases in salaries and wages costs.

The directors consider the following KPI's to be important to their business:-

2019

2018

Gross profit margin

52.51%

54.9%

Pre tax net (loss)/profit margin

(4.45)%

(3.38)%

EBITDA

£411,052

£522,429

The directors consider the results for the year to be satisfactory.

The directors consider staff numbers and their performance to be the key non financial indicator, in particular staff retention and turnover levels are monitored. The directors also monitor stock control and waste management as key performance indicators and are continuously looking to improve in these areas based upon the findings.

The directors do not consider that any further analysis using non financial key performance indicators, including those relating to environmental matters is necessary for an understanding of the performance and position of the business of the company.

PRINCIPAL RISKS AND UNCERTAINTIES

The principal risk to the company, which is common to all companies in the industry, is change to short term consumer habits. Both Kentucky Fried Chicken and the company monitor this and maintain a marketing policy with a view to smoothing these fluctuations.

FUTURE DEVELOPMENTS

On 30th December 2019, following a group restructure, the business of the Company was transferred to a fellow group company, B.J.R. Foods Limited. All assets and liabilities, franchise agreements, contracts, leases and other rights and obligations were transferred or reassigned to B.J.R. Foods Limited.

Subsequently, the Company ceased trading and became dormant. The financial statements do not include any adjustments in this respect as it was a transfer of business as a going concern.

ON BEHALF OF THE BOARD:

I Suleman - Director

4th May 2021

The directors present their report with the financial statements of the company for the period 26th November 2018 to 29th December 2019.

PRINCIPAL ACTIVITY

The principal activity of the company in the period under review was that of retail of Kentucky Fried Chicken and its associated products.

DIVIDENDS

No dividends will be distributed for the period ended 29th December 2019.

EVENTS SINCE THE END OF THE PERIOD

Information relating to events since the end of the period is given in the notes to the financial statements.

DIRECTORS

The directors shown below have held office during the whole of the period from 26th November 2018 to the date of this report.

I Suleman

Z Abbasi

FINANCIAL INSTRUMENTS

The company's treasury activities are operated within policies and procedures approved by the Board, which include defined controls on the use of financial instruments managing the company's risks.

Liquidity Risk

The company finances its operations through a mixture of retained profits, short term borrowings from the parent company and cash. The company seeks to ensure there is short term flexibility through the availability of an overdraft facility. The company monitors its cash balance on a regular basis to ensure that all foreseeable future needs can be met from available resources.

STATEMENT OF DIRECTORS' RESPONSIBILITIES

The directors are responsible for preparing the Strategic Report, the Report of the Directors 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 of 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.

STATEMENT AS TO DISCLOSURE OF INFORMATION TO AUDITORS

So far as the directors are 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 each director 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, PSJ Alexander & Co, will be proposed for re-appointment at the forthcoming Annual General Meeting.

ON BEHALF OF THE BOARD:

I Suleman - Director

4th May 2021

Qualified opinion

We have audited the financial statements of Colonel Foods Limited (the 'company') for the period ended 29th December 2019 which comprise the Statement of Comprehensive Income, Balance Sheet, Statement of Changes in Equity and Notes to the Financial Statements, including a summary of significant accounting policies. The financial reporting framework that has been applied in their preparation is applicable law and United Kingdom Accounting Standards, including 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, except for the possible effects of the matter described in the basis for qualified opinion section of our report, the financial statements:

-

give a true and fair view of the state of the company's affairs as at 29th December 2019 and of its profit for the period 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 qualified opinion

We were not requested to attend the stocktake and thus did not observe the counting of physical inventories at the end of the period. We were unable to satisfy ourselves by alternative means concerning the stock quantities held at 29th December 2019, which are included in the balance sheet at £77,242, by using other audit procedures. Consequently, we were unable to determine whether any adjustment to this amount was necessary.

We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and applicable law. Our responsibilities under those standards are further described in the Auditor's responsibilities for the audit of the financial statements section of our report. We are independent of the company in accordance with the ethical requirements that are relevant to our audit of the financial statements in the UK, including the FRC's Ethical Standard, and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our qualified opinion.

Conclusions relating to going concern

On 30th December 2019, following a group restructure, the business of the Company was transferred to a fellow group company, B.J.R. Foods Limited. All assets and liabilities, franchise agreements, contracts, leases and other rights and obligations were transferred or reassigned to B.J.R. Foods Limited. Subsequently, the Company ceased trading and became dormant.

Other information

The directors are responsible for the other information. The other information comprises the information in the Report of the Directors, but does not include the financial statements and our Report of the Auditors 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.

As described in the basis for qualified opinion section of our report, we were unable to satisfy ourselves concerning the stock quantities held at 29th December 2019. We have concluded that where the other information refers to the stock figure or related balances such as cost of sales, it may be materially misstated for the same reason.

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 Directors 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 Directors have been prepared in accordance with applicable legal requirements.

Matters on which we are required to report by exception

Except for the matter described in the basis for qualified opinion section of our report, in the light of the knowledge and understanding of the company and its environment obtained in the course of the audit, we have not identified material misstatements in the strategic report or the directors’ report.

Arising solely from the limitation on the scope of our work relating to inventory, referred to above:

-

we have not obtained all the information and explanations that we considered necessary for the purpose of our audit; and

-

we were unable to determine whether adequate accounting records have been kept.

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:

-

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.

-

the directors were not entitled to prepare the financial statements in accordance with the small companies regime and take advantage of the small companies' exemption from the requirement to prepare a Strategic Report or in preparing the Report of the Directors.

Responsibilities of directors

As explained more fully in the Statement of Directors' Responsibilities set out on page three, 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 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.

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 a Report of the Auditors 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 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.

Vimal Shah (Senior Statutory Auditor)

for and on behalf of PSJ Alexander & Co

Chartered Accountants & Statutory Auditors

1 Doughty Street

London

WC1N 2PH

4th May 2021

TURNOVER

3

7,405,501

6,420,423

Cost of sales

3,516,726

2,894,263

GROSS PROFIT

3,888,775

3,526,160

Administrative expenses

4,218,790

3,743,263

OPERATING LOSS

5

(330,015

)

(217,103

)

Interest receivable and similar income

152

-

LOSS BEFORE TAXATION

(329,863

)

(217,103

)

Tax on loss

6

(188,984

)

31,157

LOSS FOR THE FINANCIAL PERIOD

(140,879

)

(248,260

)

OTHER COMPREHENSIVE INCOME

-

-

TOTAL COMPREHENSIVE INCOME FOR THE PERIOD

(140,879

)

(248,260

)

FIXED ASSETS

Intangible assets

7

1,743,509

2,129,571

Tangible assets

8

1,361,729

1,119,422

3,105,238

3,248,993

CURRENT ASSETS

Stocks

9

77,242

46,894

Debtors

10

676,901

448,785

Cash at bank and in hand

255,968

827,615

1,010,111

1,323,294

CREDITORS

Amounts falling due within one year

11

2,594,515

2,755,574

NET CURRENT LIABILITIES

(1,584,404

)

(1,432,280

)

TOTAL ASSETS LESS CURRENT LIABILITIES

1,520,834

1,816,713

PROVISIONS FOR LIABILITIES

13

-

155,000

NET ASSETS

1,520,834

1,661,713

CAPITAL AND RESERVES

Called up share capital

14

2

2

Retained earnings

15

1,520,832

1,661,711

SHAREHOLDERS' FUNDS

1,520,834

1,661,713

The financial statements were approved by the Board of Directors and authorised for issue on 4th May 2021 and were signed on its behalf by:

I Suleman - Director

Called up

share

Retained

Total

capital

earnings

equity

£

£

£

Balance at 27th November 2017

2

1,909,971

1,909,973

Changes in equity

Total comprehensive income

-

(248,260

)

(248,260

)

Balance at 25th November 2018

2

1,661,711

1,661,713

Changes in equity

Total comprehensive income

-

(140,879

)

(140,879

)

Balance at 29th December 2019

2

1,520,832

1,520,834

1.	STATUTORY INFORMATION

Colonel Foods Limited is a private company, limited by shares , registered in England and Wales. The company's registered number and registered office address can be found on the Company Information page.

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

On 30th December 2019, following a group restructure, the business of the Company was transferred to a fellow group company, B.J.R. Foods Limited. All assets and liabilities, franchise agreements, contracts, leases and other rights and obligations were transferred or reassigned to B.J.R. Foods Limited.

Subsequently, the Company ceased trading and became dormant. The financial statements do not include any adjustments in this respect as it was a transfer of business as a going concern.

Financial Reporting Standard 102 - reduced disclosure exemptions

The company has taken advantage of the following disclosure exemption in preparing these financial statements, as permitted by FRS 102 "The Financial Reporting Standard applicable in the UK and Republic of Ireland":

•

the requirements of Section 7 Statement of Cash Flows.

Critical accounting judgements and key sources of estimation uncertainty

(a) Estimation of useful economic lives of tangible fixed assets

Tangible fixed assets represent a significant proportion of the asset base of the Company. Therefore, the estimates and assumptions made to determine their carrying values and related depreciation are critical to the Company's financial position and performance.

The charge in respect of periodic depreciation is derived after determining an estimate of an asset's expected useful life and the expected residual value at the end of its life. Increasing an asset's expected life or its residual value would result in a reduced depreciation charge in the Income Statement.

The useful lives of assets are determined by management at the time the asset is acquired and reviewed annually for appropriateness. The lives are based on historical experience with similar assets as well as anticipation of future events, which may impact their life, such as changes in technology.

(b) Impairment of goodwill

Management judgment is required in estimating the future cash flows of the cash-generating units. These values are sensitive to cash flows projected for the periods for which detailed forecasts are available, and to assumptions regarding the term sustainable pattern of cash flows thereafter. While the acceptable range within which underlying assumptions can be applied is governed by the requirement for resulting forecasts to be compared with actual performance and verifiable economic data in future years, the cash flow forecasts necessarily and appropriately reflect Management's view of future business prospects.

Turnover

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

Goodwill

Goodwill, being the amount paid in connection with the acquisition of a business, is being amortised evenly over its remaining estimated useful life of 10 years.

Other intangible assets

Intangible fixed assets are stated at cost less amortisation. Amortisation is provided at rates calculated to write off the cost of the fixed assets, less their estimated residual value, straight line over the period of the licence or their estimated useful life.

Tangible fixed assets

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

Plant and machinery

-

at varying rates

Stocks

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

Taxation

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

Hire purchase and leasing 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.

3.

TURNOVER

The whole of the turnover is attributable to one class of business.

All turnover arose within the United Kingdom.

4.	EMPLOYEES AND DIRECTORS

Period

Period

26/11/18

27/11/17

to

to

29/12/19

25/11/18

£

£

Wages and salaries

2,027,702

1,636,176

Social security costs

89,819

70,832

Other pension costs

21,108

11,975

2,138,629

1,718,983

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

Period

Period

26/11/18

27/11/17

to

to

29/12/19

25/11/18

Shop staff

163

175

Period

Period

26/11/18

27/11/17

to

to

29/12/19

25/11/18

£

£

Directors' remuneration

-

-

5.	OPERATING LOSS

The operating loss is stated after charging:

Period

Period

26/11/18

27/11/17

to

to

29/12/19

25/11/18

£

£

Other operating leases

243,424

226,261

Depreciation - owned assets

354,852

405,363

Loss on disposal of fixed assets

28,459

117,753

Goodwill amortisation

363,492

322,531

Licence fees amortisation

20,234

9,468

Transfer fees amortisation

2,336

2,170

Auditors remuneration

12,350

13,875

6.

TAXATION

Analysis of the tax (credit)/charge

The tax (credit)/charge on the loss for the period was as follows:

Period

Period

26/11/18

27/11/17

to

to

29/12/19

25/11/18

£

£

Current tax:

UK corporation tax

(33,984

)

31,157

Deferred taxation

(155,000

)

-

Tax on loss

(188,984

)

31,157

Reconciliation of total tax (credit)/charge included in profit and loss

The tax assessed for the period is lower than the standard rate of corporation tax in the UK. The difference is explained below:

Period

Period

26/11/18

27/11/17

to

to

29/12/19

25/11/18

£

£

Loss before tax

(329,863

)

(217,103

)

Loss multiplied by the standard rate of corporation tax in the UK of 19% (2018 - 19%)

(62,674

)

(41,250

)

Effects of:

Depreciation in excess of capital allowances

24,923

59,650

Adjustments to tax charge in respect of previous periods

3,767

12,757

Deferred taxation

(155,000

)

-

Total tax (credit)/charge

(188,984

)

31,157

7.	INTANGIBLE FIXED ASSETS

Licence

Transfer

Goodwill

fees

fees

Totals

£

£

£

£

COST

At 26th November 2018

and 29th December 2019

8,861,989

195,965

20,028

9,077,982

AMORTISATION

At 26th November 2018

6,879,845

58,218

10,348

6,948,411

Amortisation for period

363,492

20,234

2,336

386,062

At 29th December 2019

7,243,337

78,452

12,684

7,334,473

NET BOOK VALUE

At 29th December 2019

1,618,652

117,513

7,344

1,743,509

At 25th November 2018

1,982,144

137,747

9,680

2,129,571

8.	TANGIBLE FIXED ASSETS

Plant and

machinery

£

COST

At 26th November 2018

2,755,504

Additions

627,368

Disposals/Impairments

(916,582

)

At 29th December 2019

2,466,290

DEPRECIATION

At 26th November 2018

1,636,082

Charge for period

354,852

Disposals/Impairments

(886,373

)

At 29th December 2019

1,104,561

NET BOOK VALUE

At 29th December 2019

1,361,729

At 25th November 2018

1,119,422

9.

STOCKS

2019

2018

£

£

Raw materials

77,242

46,894

10.

DEBTORS: AMOUNTS FALLING DUE WITHIN ONE YEAR

2019

2018

£

£

Trade debtors

1,162

8,491

Amounts owed by group undertakings

506,328

371,813

Other debtors

21,907

16,684

Taxation

41,994

-

Prepayments

105,510

51,797

676,901

448,785

11.

CREDITORS: AMOUNTS FALLING DUE WITHIN ONE YEAR

2019

2018

£

£

Trade creditors

446,653

418,170

Amounts owed to group undertakings

1,729,163

1,976,383

Taxation

-

19,000

Social security and other taxes

18,767

15,522

VAT

263,936

169,638

Other creditors

87,511

75,730

Accrued expenses

48,485

81,131

2,594,515

2,755,574

12.	LEASING AGREEMENTS

Minimum lease payments under non-cancellable operating leases fall due as follows:

2019

2018

£

£

Within one year

180,200

165,402

Between one and five years

720,800

648,800

In more than five years

133,086

243,300

1,034,086

1,057,502

13.	PROVISIONS FOR LIABILITIES

2019

2018

£

£

Deferred taxation

-

155,000

Deferred

tax

£

Balance at 26th November 2018

155,000

Credit to Statement of Comprehensive Income during period

(155,000

)

Balance at 29th December 2019

-

14.	CALLED UP SHARE CAPITAL

Allotted, issued and fully paid:

Number:

Class:

Nominal

2019

2018

value:

£

£

2

Ordinary

1

2

2

15.

RESERVES

Retained

earnings

£

At 26th November 2018

1,661,711

Deficit for the period

(140,879

)

At 29th December 2019

1,520,832

16.	PENSION COMMITMENTS

The company operates defined contribution pension schemes and contributions made by the Company to the schemes during the period amounted to £21,108 (2018: £11,975).

17.	ULTIMATE PARENT UNDERTAKING AND CONTROLLING PARTY

The immediate parent undertaking is 1st Rate Investment (UK) Limited, a company incorporated and registered in England & Wales. Its consolidated accounts are available from Companies House, Crown Way, Cardiff, CF14 3UZ.

The ultimate parent company is GFI Holdings Limited, a company incorporated and registered in Guernsey.

The ultimate controlling party is Mr A. Mammadov.