ACCOUNTS - Final Accounts preparation
ACCOUNTS - Final Accounts preparation
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Registered number:
FOR THE YEAR ENDED 30 JUNE 2021
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KZ CATERING LTD
COMPANY INFORMATION
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KZ CATERING LTD
CONTENTS
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KZ CATERING LTD
STRATEGIC REPORT
FOR THE YEAR ENDED 30 JUNE 2021
We aim to present a balanced and comprehensive review of the development and performance of the business during the year and our position at the year end by reflection of the size and non-complex nature of the business.
During the year, the company continued to operate as a KFC franchisee.
The Director's are pleased with the company's recovery off the back of a challenging previous year. Due to COVID-19, stores were closed for a period of time to ensure customers and staff remained safe during the early outbreaks of COVID-19 and began reopening throughout June 2020. The results for the year present an encouraging future for the company and platform for future growth. Turnover in the year increased from £6,173,990 to £8,853,476 and this has been attributable to a number of factors including the reopening of stores for the entire trading year, a reduction in VAT rates, an increase in delivery and drive thru sales. As a result of the increase in turnover, reduction in business rates and grants received, the company recorded an operating profit of £1,141,138 (2020: loss of £28,740). The company recorded a net cash inflow from operating activities of £1,281,241 (2020: net outflow of £429,903) and net assets at the balance sheet date amounted to £1,523,373 (2020: £754,714). The continued strengthening of the balance sheet and cash position of the company has shown the company to have a resilience to the economic affects that COVID-19 has has on the UK economy.
The principal risks to the company are changes to consumer habits, entry of new competitors within geographical areas in which the company operates and changes in government controls and policies towards the fast food industry. Both Kentucky Fried Chicken and the company monitor these, maintain a marketing policy, evolve store menus, and set appropriate recommended prices to smooth these fluctuations.
COVID-19 Since the reopening of stores in June 20, the Quick Service Restaurant sector has proven to be resilient and many stores recorded record sales and profitability. The government had provided assistance with a reduction in VAT, local grants, Coronavirus job retention schemes, Eat Out to Help Out scheme and a full reduction in business rates. As the country recovers from the restrictions in place and government support to the retail and hospitality sector is gradually withdrawn, there is an uncertainty to the degree of sales and profits that will be affected.
Financial Key Performance Indicators for the stores are the level of turnover gross profit and EBITDA.
Turnover: £8,853,476 (2020: £6,173,990) Gross profit for the period is £2,859,080 (2020: £1,623,930). EBITDA: £2,057,607 (2020: £904,214)
The principal non-key performance indicator is the performance against inspections by Kentucky Fried Chicken, and the company continues to achieve satisfactory performance throughout the year.
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KZ CATERING LTD
STRATEGIC REPORT (CONTINUED)
FOR THE YEAR ENDED 30 JUNE 2021
This report was approved by the board on 25 October 2021 and signed on its behalf.
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KZ CATERING LTD
DIRECTORS' REPORT
FOR THE YEAR ENDED 30 JUNE 2021
The directors present their report and the financial statements for the year ended 30 June 2021.
The directors are responsible for preparing the Strategic Report, the Directors' Report and the financial statements in accordance with applicable law and regulations.
Company law requires the directors to prepare financial statements for each financial year. Under that law the directors have elected to prepare the financial statements in accordance with applicable law and United Kingdom Accounting Standards (United Kingdom Generally Accepted Accounting Practice), including Financial Reporting Standard 102 ‘The Financial Reporting Standard applicable in the UK and Republic of Ireland'. 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 for the Company's financial statements and then apply them consistently;
∙make judgments 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 to 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.
The profit for the year, after taxation, amounted to £768,659 (2020 - loss £35,258).
No ordinary dividends were paid in the period. The directors do not recommend payment of a final dividend.
The directors who served during the year were:
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KZ CATERING LTD
DIRECTORS' REPORT (CONTINUED)
FOR THE YEAR ENDED 30 JUNE 2021
Financial instruments
The company uses a variety of financial instruments, including cash, loans and trade creditors that arise from its operations. The main purpose of these financial instruments is to provide working capital for the company's operations. The director considers that the main risks arising from the company's financial instruments to be interest rate risk and liquidity risk and therefore sets and reviews policies for managing these risks below. These policies have remained unchanged from the previous year. Liquidity risk The company seeks to manage financial risk by ensuring sufficient liquidity is available to meet foreseeable needs and to invest cash assets safely. Cash is monitored on a weekly basis and funding is secured for significant acquisitions before any commitment is made. The Company maintains sufficient level of cash and cash equivalents to enable to meet its operation requirements. Other Risks The directors and KFC continue to assess risks arising from food and wage inflation in addition to government policies around obesity. In response to government policies KFC has announced a calorie reduction commitment to remove 20% of calories per serving by 2025. The company continues to improve procedures to reduce food waste and automaton processes to ensure food and wage inflation is mitigated as far as possible.
The company continues to invest in the refurbishment of stores and training of staff to maintain sales and profit growth.
The auditors, Hurkan Sayman & Co, will be proposed for reappointment in accordance with section 485 of the Companies Act 2006.
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KZ CATERING LTD
DIRECTORS' REPORT (CONTINUED)
FOR THE YEAR ENDED 30 JUNE 2021
This report was approved by the board on
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KZ CATERING LTD
INDEPENDENT AUDITORS' REPORT TO THE MEMBERS OF KZ CATERING LTD
We have audited the financial statements of KZ Catering Ltd (the 'Company') for the year ended 30 June 2021, which comprise the Statement of Comprehensive Income, the Balance Sheet, the Statement of Cash Flows, the Statement of Changes in Equity and the related notes, 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).
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 United Kingdom, including the Financial Reporting Council'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.
In auditing the financial statements, we have concluded that the directors' use of the going concern basis of accounting in the preparation of the financial statements is appropriate.
Based on the work we have performed, we have not identified any material uncertainties relating to events or conditions that, individually or collectively, may cast significant doubt on the Company's ability to continue as a going concern for a period of at least twelve months from when the financial statements are authorised for issue.
Our responsibilities and the responsibilities of the directors with respect to going concern are described in the relevant sections of this report.
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KZ CATERING LTD
INDEPENDENT AUDITORS' REPORT TO THE MEMBERS OF KZ CATERING LTD (CONTINUED)
The other information comprises the information included in the Annual Report other than the financial statements and our Auditors' 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.
In our opinion, based on the work undertaken in the course of the audit:
∙the information given in the Strategic Report and the Directors' Report for the financial year for which the financial statements are prepared is consistent with the financial statements; and
∙the Strategic Report and the Directors' Report have been prepared in accordance with applicable legal requirements.
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.
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KZ CATERING LTD
INDEPENDENT AUDITORS' REPORT TO THE MEMBERS OF KZ CATERING LTD (CONTINUED)
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 Auditors' 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 obtained an understanding of the legal and regulatory framework applicable to the company, through discussions with the Directors and from our general commercial experience. We determined which laws and regulations were of most significance in the context of the company and which are directly relevant to specific assertions in the financial statements, being United Kingdom Accounting Standard (Financial Reporting Standards 102), and applicable law (the Companies Act 2006 and tax legislation's). We understood how the company is complying with those legal and regulatory frameworks, by making enquiries of the Directors of known or suspected instances of non-compliance with laws and regulations. We corroborated our enquiries through our review of legal expenses incurred during the year. We reviewed the financial statement disclosures to assess compliance with the relevant laws and regulations discussed above. We remained alert to any indications of non-compliance throughout the audit. We assessed the susceptibility of the company's financial statements to material misstatement, including how fraud might occur, by discussing with the Directors to understand where it is considered there was a susceptibility of fraud. We evaluated managements incentives and opportunities for fraudulent manipulation of the financial statements, and determined that the principal risks were related to posting inappropriate journal entries to manipulate financial results and management bias in accounting estimates. In addressing the risk of fraud through management override of controls, we tested the appropriateness of journal entries and other adjustments; assessing whether the judgements made in making accounting estimates are indicative of potential bias; and evaluating the business rationale of any significant transactions that are unusual or outside the normal course of business.
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 a 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.
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 Auditors' Report.
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KZ CATERING LTD
INDEPENDENT AUDITORS' REPORT TO THE MEMBERS OF KZ CATERING LTD (CONTINUED)
This report is made solely to the Company's members, as a body, in accordance with Chapter 3 of Part 16 of the Companies Act 2006. Our audit work has been undertaken so that we might state to the Company's members those matters we are required to state to them in an Auditors' Report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the Company and the Company's members, as a body, for our audit work, for this report, or for the opinions we have formed.
for and on behalf of
Chartered Accountants
291 Green Lanes
London
N13 4XS
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KZ CATERING LTD
STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEAR ENDED 30 JUNE 2021
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KZ CATERING LTD
REGISTERED NUMBER: 10692875
BALANCE SHEET
AS AT 30 JUNE 2021
The financial statements were approved and authorised for issue by the board and were signed on its behalf on
The notes on pages 15 to 27 form part of these financial statements.
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KZ CATERING LTD
STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 30 JUNE 2021
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KZ CATERING LTD
STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED 30 JUNE 2021
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KZ CATERING LTD
ANALYSIS OF NET DEBT
FOR THE YEAR ENDED 30 JUNE 2021
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KZ CATERING LTD
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2021
KZ Catering Limited is a private company limited by share capital, incorporated in England and Wales, registration number 10692875. The address of its registered office is 291 Green Lanes, London N13 4XS.
The company's principal activity is that of a KFC franchisee.
2.Accounting policies
The financial statements have been prepared under the historical cost convention unless otherwise specified within these accounting policies and in accordance with Financial Reporting Standard 102, the Financial Reporting Standard applicable in the UK and the Republic of Ireland and the Companies Act 2006.
The preparation of financial statements in compliance with FRS 102 requires the use of certain critical accounting estimates. It also requires management to exercise judgment in applying the Company's accounting policies (see note 3).
The following principal accounting policies have been applied:
Revenue from the sale of food, beverages and merchandise is recognised at the point of sale. Grants of a revenue nature are recognised in the Statement of Comprehensive Income in the same period as the related expenditure.
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KZ CATERING LTD
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2021
2.Accounting policies (continued)
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KZ CATERING LTD
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2021
2.Accounting policies (continued)
Goodwill
Other intangible assets
All intangible assets are considered to have a finite useful life. If a reliable estimate of the useful life cannot be made, the useful life shall not exceed ten years.
The estimated useful lives range as follows:
Depreciation is charged so as to allocate the cost of assets less their residual value over their estimated useful lives, using the straight line and reducing balance basis.
Depreciation is provided on the following basis:
The assets' residual values, useful lives and depreciation methods are reviewed, and adjusted prospectively if appropriate, or if there is an indication of a significant change since the last reporting date.
Gains and losses on disposals are determined by comparing the proceeds with the carrying amount and are recognised in profit or loss.
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KZ CATERING LTD
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2021
2.Accounting policies (continued)
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KZ CATERING LTD
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2021
2.Accounting policies (continued)
Provisions are charged as an expense to profit or loss in the year that the Company becomes aware of the obligation, and are measured at the best estimate at the Balance Sheet date of the expenditure required to settle the obligation, taking into account relevant risks and uncertainties. When payments are eventually made, they are charged to the provision carried in the Balance Sheet. On an ongoing basis, the company evaluates its estimates using historical experience, consultation with experts and other methods considered reasonable in the particular circumstances. Actual results may differ significantly from the estimates, the effect of which is recognised in the period in which is recognised in the period in which the facts that give rise to the revision becomes known. Management has made judgment over the following accounting policies - The estimated economic life of goodwill (note 11); and - The estimated economic lives of fixtures, fittings and equipment (note 12).
The whole of the turnover is attributable to the sale of goods in the year.
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KZ CATERING LTD
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2021
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KZ CATERING LTD
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2021
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KZ CATERING LTD
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2021
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KZ CATERING LTD
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2021
10.Taxation (continued)
The Corporation Tax main rate for 1 July 2021 is set at 19% and it is at this rate until 31 March 2023. From 1 April 2023, the Corporation Tax main rate for non-ring fenced profits will be increased to 25% applying to profits over £250,000. This will effect the company's corporation tax charges accordingly.
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KZ CATERING LTD
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2021
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KZ CATERING LTD
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2021
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KZ CATERING LTD
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2021
16.Deferred taxation (continued)
The Company operates a defined contributions pension scheme. The assets of the scheme are held separately from those of the Company in an independently administered fund. The pension cost charge represents contributions payable by the Company to the fund and amounted to £26,911 (2020: £22,357). Contributions totaling £7,156 (2020: £7,861) were payable to the fund at the balance sheet date and are included in creditors.
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KZ CATERING LTD
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2021
The company's immediate and ultimate parent is SBR South Limited, incorporated in England and Wales. Group financial statements can be obtained from 1C Finsbury Park Road, London N4 2AG.
The company is under no overall control.
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