DNP Restaurants Ltd 31/12/2017 iXBRL

DNP Restaurants Ltd 31/12/2017 iXBRL

DNP RESTAURANTS LTD - Company Information

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31/12/2017 2017-12-31 false false false false true false false false false false false false false true false false true false false false false false false true false No description of principal activities is disclosed 2017-01-01 Sage Accounts Production 18.30 - FRS xbrli:pure xbrli:shares iso4217:GBP 05420213 2017-01-01 2017-12-31 05420213 2017-12-31 05420213 2016-12-31 05420213 2016-01-01 2016-12-31 05420213 2016-12-31 05420213 core:NetGoodwill 2017-01-01 2017-12-31 05420213 core:PatentsTrademarksLicencesConcessionsSimilar 2017-01-01 2017-12-31 05420213 core:PlantMachinery 2017-01-01 2017-12-31 05420213 core:FurnitureFittingsToolsEquipment 2017-01-01 2017-12-31 05420213 bus:RegisteredOffice 2017-01-01 2017-12-31 05420213 bus:OrdinaryShareClass1 2017-01-01 2017-12-31 05420213 bus:LeadAgentIfApplicable 2017-01-01 2017-12-31 05420213 bus:Director1 2017-01-01 2017-12-31 05420213 bus:CompanySecretary1 2017-01-01 2017-12-31 05420213 core:WithinOneYear 2017-12-31 05420213 core:WithinOneYear 2016-12-31 05420213 core:NetGoodwill 2016-12-31 05420213 core:PatentsTrademarksLicencesConcessionsSimilar 2016-12-31 05420213 core:NetGoodwill 2017-12-31 05420213 core:PatentsTrademarksLicencesConcessionsSimilar 2017-12-31 05420213 core:PlantMachinery 2016-12-31 05420213 core:FurnitureFittingsToolsEquipment 2016-12-31 05420213 core:PlantMachinery 2017-12-31 05420213 core:FurnitureFittingsToolsEquipment 2017-12-31 05420213 core:DeferredTaxation 2017-01-01 2017-12-31 05420213 core:AfterOneYear 2017-12-31 05420213 core:AfterOneYear 2016-12-31 05420213 core:UKTax 2017-01-01 2017-12-31 05420213 core:UKTax 2016-01-01 2016-12-31 05420213 bus:AllOrdinaryShares 2017-01-01 2017-12-31 05420213 bus:AllOrdinaryShares 2016-01-01 2016-12-31 05420213 core:RetainedEarningsAccumulatedLosses 2016-12-31 05420213 core:RetainedEarningsAccumulatedLosses 2015-12-31 05420213 core:RetainedEarningsAccumulatedLosses 2017-12-31 05420213 core:RetainedEarningsAccumulatedLosses 2016-12-31 05420213 core:ShareCapital 2017-12-31 05420213 core:ShareCapital 2016-12-31 05420213 bus:OrdinaryShareClass1 core:ShareCapital 2017-12-31 05420213 bus:OrdinaryShareClass1 core:ShareCapital 2016-12-31 05420213 core:BetweenOneFiveYears 2017-12-31 05420213 core:BetweenOneFiveYears 2016-12-31 05420213 core:MoreThanFiveYears 2017-12-31 05420213 core:MoreThanFiveYears 2016-12-31 05420213 core:NetGoodwill 2016-12-31 05420213 core:PatentsTrademarksLicencesConcessionsSimilar 2016-12-31 05420213 core:CostValuation core:Non-currentFinancialInstruments 2017-12-31 05420213 core:Non-currentFinancialInstruments 2017-12-31 05420213 core:Non-currentFinancialInstruments 2016-12-31 05420213 core:AcceleratedTaxDepreciationDeferredTax 2017-12-31 05420213 core:AcceleratedTaxDepreciationDeferredTax 2016-12-31 05420213 core:PlantMachinery 2016-12-31 05420213 core:FurnitureFittingsToolsEquipment 2016-12-31 05420213 core:DeferredTaxation 2016-12-31 05420213 core:DeferredTaxation 2017-12-31 05420213 bus:Director1 2016-12-31 05420213 bus:Director1 2017-12-31 05420213 bus:Director1 2015-12-31 05420213 bus:Director1 2016-12-31 05420213 bus:Director1 2016-01-01 2016-12-31 05420213 bus:FRS102 2017-01-01 2017-12-31 05420213 bus:Audited 2017-01-01 2017-12-31 05420213 bus:FullAccounts 2017-01-01 2017-12-31 05420213 bus:LargeMedium-sizedCompaniesRegimeForAccounts 2017-01-01 2017-12-31 05420213 bus:PrivateLimitedCompanyLtd 2017-01-01 2017-12-31
Company registration number: 05420213
DNP Restaurants Ltd
Financial statements
31 December 2017
DNP Restaurants Ltd
Contents
Directors and other information
Strategic report
Director's report
Independent auditor's report to the members
Statement of income and retained earnings
Statement of financial position
Statement of cash flows
Notes to the financial statements
DNP Restaurants Ltd
Directors and other information
Director Mr D. Padmore
Secretary J. Padmore
Company number 05420213
Registered office Ravenside Retail Park
Bexhill on Sea
East Sussex
TN40 2JS
Auditor Manex Accountants Ltd
9 Castle Court (2)
Castlegate Way
Dudley
West Midlands
DY1 4RD
Accountants Windsors Rybridge Ltd
9 Castle Court (2)
Castlegate Way
Dudley
West Midlands
DY1 4RD
Bankers HSBC plc
Park Edward Road
Eastbourne
East Sussex
BN23 8AS
DNP Restaurants Ltd
Strategic report
Year ended 31 December 2017
Business review
The director aims to present a review of the development and performance of the company during the year under review and its position at the year end. This review is consistent with the size and nature of the company and is written in the context of the risks and uncertainties it faces.
The company operates in a highly competitive market, with consumer behaviour impacting the company's turnover, and the variability of commodity prices impacting profitability.
The company considers its key performance indicators are those that communicate the financial performance and strength of the company, including turnover, gross profit and operating profit. The company realised continued sales growth during 2017, with turnover increasing from £18.0m to £19.9m, reflecting a 10% increase over the previous year. The company's gross profit increased from £7.7m to £8.4m.
During the period the company continued its policy of investment in store refurbishments in line with the national McDonald's re-imaging strategy, totally refurbishing another two of its stores. The re-imaging strategy continued to have a positive impact on sales growth, which is in line with the directors' expectations and objectives.
Given the straightforward nature of the business, the director is of the opinion that analysis using additional KPI's is not necessary for an understanding of the development, performance or position of the company.
Principle risks and uncertainties
The management of the company and the nature of its trading strategy are subject to a number of risks, which are set out below. The company operates a thorough risk assessment and management process which involves a formal review of all the risks identified below and introducing processes to monitor and mitigate each risk, where possible.
As previously mentioned, the company operates in a highly competitive market with consumer behaviour impacting on both the company's turnover and profitability. The company mitigates this risk by adopting a policy of constantly assessing its pricing strategy with ongoing market research.
The company remains exposed to periods of food cost inflation together with the variability of commodity prices, which both impact on the company's profitability. The company continually assesses any risks identified with the aim of mitigating the threats these may have on the company's operations and profitability. The company's supply chain is closely maintained by McDonald's, who are therefore able to negotiate effectively on behalf of franchisees in order to ensure better purchasing terms. This helps to protect the company from risks associated with fluctuating food costs.
The company is inherently exposed to pressures within the labour market and to wage cost inflation due to the labour intensive nature of the business, with wage costs representing the largest cost to the business outside of food costs. The company mitigates this risk by a policy of adopting remuneration and benefits packages designed to be competitive within the market as well as ensuring full compliance with labour market regulations with employment policies to allow fulfilling career opportunities for all employees.
Financial risk management and policies
The company's principal financial instruments comprise bank balances, loans to the company, and trade creditors. The main purpose of these instruments is to provide funds for the company's operations. Their existence exposes the company to a number of financial risks, which have been considered and are managed as follows:
Liquidity risk: Liquidity risk is the risk that the company will have insufficient resources to meet its financial liabilities as they fall due. The company's strategy to managing liquidity risk is to ensure that the company has sufficient funds to meet all its potential liabilities as they fall due. In respect of bank balances, the liquidity risk is managed by maintaining a balance between the continuity of funding and flexibility through the use of overdraft facilities at floating rates of interest. In respect of bank loans, although the interest rates are variable, monthly repayments are fixed. The liquidity risk is therefore managed by ensuring there are sufficient funds available to meet the monthly repayments. In respect of trade creditors, the liquidity risk is managed by ensuring sufficient funds are available to meet amounts due for payment.
Operational risk: Operational risk is the risk of a direct or indirect loss resulting from the inadequacies or failures of processes or controls due to technology, staff, organisation or external factors. To monitor and control operational risk, the company maintains a system of comprehensive policies and a control framework which is designed to provide and sound and well-controlled operational environment.
Interest rate risk: Interest rate risk is the risk that financial performance of the company will be adversely affected by adverse fluctuations on interest rates being charged to the company on its financial instruments, most noticeably bank loans and its bank overdraft facility. The interest rate risk is managed by the on-going monitoring and assessment of its borrowings and the interest rate charged.
Price risk: Price risk is the risk that financial performance of the company will be adversely affected by pricing charges. Due to the nature of the financial instruments used by the company, there is no exposure to price risk. The company sets its own prices within allowable variations. Cash flow and liquidity exposure is therefore directly related to prices and turnover.
Credit risk: Credit risk is the risk of a potential loss from a customer or counterparty default. Due to the nature of the company's trade, there is no exposure to credit risk.
Currency risk: Currency risk is the risk that financial performance of the company will be adversely affected by adverse fluctuations in foreign currencies used by the company. The company has no exposure to foreign currency risk.
This report was approved by the board of directors on 30 November 2018 and signed on behalf of the board by:
Mr D. Padmore
Director
DNP Restaurants Ltd
Director's report
Year ended 31 December 2017
The director presents his report and the financial statements of the company for the year ended 31 December 2017.
Director
The director who served the company during the year was as follows:
Mr D. Padmore
Dividends
Particulars of recommended dividends are detailed in note 11 to the financial statements.
Future developments
The director aims to maintain the management policies which have resulted in the turnover and profitability of this trading period. He consider that the next 12 month period will show a further growth in sales from continuing operations, assisted by the continuing investment in the store re-imaging strategy. Since the year end the company has purchased another restaurant which the director is confident will further help to improve the profitability of the company.
Employment of disabled persons
The company operates an equal opportunities policy with regard to recruitment and seeks to offer suitable work and training wherever practicable to persons with disabilities. The policy of the company is to ensure that disabled applicants for employment are given full and fair consideration having regard to their particular aptitudes and abilities. Existing disabled employees are given equal access to appropriate training, career development and promotion opportunities within the company. In the event of employees becoming disabled while in the employment of the company, all reasonable means are explored to achieve retention in employment in the same or an alternative capacity.
Employee involvement
The company aims to promote a working environment free from unlawful harassment, victimisation, bullying and discrimination. The company regards all of its employees as members of a team where opinions are valued and everyone is regarded as equal in status and treated with fairness and respect. The company endeavours to ensure that no job applicant or existing employee is treated less favourably on the grounds of their gender, age, marital status, disability, race, colour, sexual orientation, nationality, ethnic origin, religion or belief and that nobody is disadvantaged by conditions, requirements or practices which cannot be shown to be just and fair. The way the company recruits and works is intended to ensure that employees are selected, promoted and treated according to their ability and that everyone has an equal opportunity to receive training and development. The company communicates regularly with all employees on matters relating to its performance. Employees are encouraged to contribute to the decision making process through regular staff meetings held by the management of the company to discuss matters of concern. An open management policy is operated whereby all members of staff (including part-time and casual staff) are briefed regularly and kept informed on matters affecting the company by means of regular store meetings and communications, together with personal appraisals and feedback sessions.
Financial instruments
The company's principal financial instruments comprise bank balances, loans to the company, and trade creditors. The main purpose of these instruments is to provide funds for the company's operations. Their existence exposes the company to a number of financial risks, which are detailed in the Strategic Report under financial risk management and policies.
Disclosure of information in the strategic report.
In accordance with section 414C(11) of the Companies Act 2006 (Strategic Report and Directors' Report) Regulations 2013 the company has set out in the company's strategic report information required by schedule 7 of the Large and Medium-sized Companies and Groups (Accounts and Reports) Regulations 2008.
Director's responsibilities statement
The director is responsible for preparing the strategic report, director's report and the financial statements in accordance with applicable law and regulations.
Company law requires the director to prepare financial statements for each financial year. Under that law the director has elected to prepare the financial statements in accordance with United Kingdom Generally Accepted Accounting Practice (United Kingdom Accounting Standards and applicable law). Under company law the director must not approve the financial statements unless he is satisfied that they give a true and fair view of the state of affairs of the company and the profit or loss of the company for that period.
In preparing these financial statements, the director is required to:
- select suitable accounting policies and then apply them consistently;
- make judgments and accounting estimates that are reasonable and prudent; and
- prepare the financial statements on the going concern basis unless it is inappropriate to presume that the company will continue in business.
The director is responsible for keeping adequate accounting records that are sufficient to show and explain the company's transactions and disclose with reasonable accuracy at any time the financial position of the company and enable him to ensure that the financial statements comply with the Companies Act 2006. 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.
Auditor
Each of the persons who is a director at the date of approval of this report confirms that:
- so far as they are aware, there is no relevant audit information of which the company's auditor is unaware; and - they have taken all steps that they ought to have taken as a director to make themselves aware of any relevant audit information and to establish that the company's auditor is aware of that information.
A resolution to reappoint Manex Accountants Ltd as auditor will be proposed at the forthcoming Annual General Meeting.
This report was approved by the board of directors on 30 November 2018 and signed on behalf of the board by:
Mr D. Padmore
Director
DNP Restaurants Ltd
Independent auditor's report to the members of
DNP Restaurants Ltd
Year ended 31 December 2017
Opinion
I have audited the financial statements of DNP Restaurants Ltd for the year ended 31 December 2017 which comprise the statement of income and retained earnings, statement of financial position, 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 FRS 102 The Financial Reporting Standard applicable in the UK and Republic of Ireland (United Kingdom Generally Accepted Accounting Practice). 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. My audit work has been undertaken so that I might state to the company's members those matters I am required to state to them in an auditors report and for no other purpose. To the fullest extent permitted by law, I do not accept or assume responsibility to anyone other than the company and the company's members as a body, for my audit work, for this report, or for the opinions I have formed. In my opinion the financial statements: - give a true and fair view of the state of the company's affairs as at 31 December 2017 and of its profit for the year then ended; - have been properly prepared in accordance with United Kingdom Generally Accepted Accounting Practice; and - have been prepared in accordance with the requirements of the Companies Act 2006.
Basis for opinion
I conducted my audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and applicable law. My responsibilities under those standards are further described in the auditor’s responsibilities for the audit of the financial statements section of our report. I am independent of the company in accordance with the ethical requirements that are relevant to my audit of the financial statements in the UK, including the FRC’s Ethical Standard, and I have fulfilled my other ethical responsibilities in accordance with these requirements. I believe that the audit evidence I have obtained is sufficient and appropriate to provide a basis for my opinion.
Conclusions relating to going concern
I have nothing to report in respect of the following matters in relation to which the ISAs (UK) require me to report to you where:
- the director's use of the going concern basis of accounting in the preparation of the financial statements is not appropriate; or
- the director has not disclosed in the financial statements any identified material uncertainties that may cast significant doubt about the 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 other information comprises the information included in the annual report, other than the financial statements and my auditor’s report thereon. The director is responsible for the other information. My opinion on the financial statements does not cover the other information and, except to the extent otherwise explicitly stated in my report, I do not express any form of assurance conclusion thereon.
In connection with my audit of the financial statements, my responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial statements or my knowledge obtained in the audit or otherwise appears to be materially misstated. If I identify such material inconsistencies or apparent material misstatements, I am 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 I have performed, I conclude that there is a material misstatement of this other information, I are required to report that fact.
I have nothing to report in this regard.
Opinions on other matters prescribed by the Companies Act 2006
In my opinion, based on the work undertaken in the course of the audit:
- the information given in the strategic report and the director's report for the financial year for which the financial statements are prepared is consistent with the financial statements; and
- the strategic report and the director's report has been prepared in accordance with applicable legal requirements.
Matters on which we are required to report by exception
In the light of the knowledge and understanding of the company and its environment obtained in the course of the audit, I have not identified material misstatements in the strategic report or the director's report. I have nothing to report in respect of the following matters where the Companies Act 2006 requires me to report to you if, in my opinion: - adequate accounting records have not been kept, or returns adequate for my audit have not been received from branches not visited by me; or - the financial statements are not in agreement with the accounting records and the returns; or - certain disclosures of director's remuneration specified by law are not made; or - I have not received all the information and explanations I require for my audit.
Responsibilities of directors
As explained more fully in the director's responsibilities statement, the director is responsible for the preparation of the financial statements and for being satisfied that they give a true and fair view, and for such internal control as the director determines 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 director is responsible for assessing the company’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the director either intends to liquidate the company or to cease operations, or has no realistic alternative but to do so.
Auditor's responsibilities for the audit of the financial statements
My 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 my 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), I exercise professional judgment and maintain professional scepticism throughout the audit. I 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 my 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 internal control. - Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by the director. - Conclude on the appropriateness of the director's 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 company’s ability to continue as a going concern. If I conclude that a material uncertainty exists, we are required to draw attention in my auditor’s report to the related disclosures in the financial statements or, if such disclosures are inadequate, to modify my opinion. My conclusions are based on the audit evidence obtained up to the date of my auditor’s report. However, future events or conditions may cause the 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. I 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 I identify during my audit.
Clinton Meehan Bsc FCA
Manex Accountants Ltd
Chartered Accountants and Statutory Auditor
9 Castle Court (2)
Castlegate Way
Dudley
West Midlands
DY1 4RD
30 November 2018
DNP Restaurants Ltd
Statement of income and retained earnings
Year ended 31 December 2017
2017 2016
Note £ £
Turnover 4 19,979,055 18,096,752
Cost of sales ( 11,506,919) ( 10,330,590)
_______ _______
Gross profit 8,472,136 7,766,162
Administrative expenses ( 8,283,726) ( 7,632,564)
_______ _______
Operating profit 5 188,410 133,598
Other interest receivable and similar income 8 - 648
Interest payable and similar expenses 9 ( 72,365) ( 39,193)
_______ _______
Profit before taxation 116,045 95,053
Tax on profit 10 ( 45,126) ( 33,731)
_______ _______
Profit for the financial year and total comprehensive income 70,919 61,322
_______ _______
Dividends declared and paid or payable during the year 11 ( 170,000) ( 200,000)
Retained earnings at the start of the year 206,166 344,844
_______ _______
Retained earnings at the end of the year 107,085 206,166
_______ _______
All the activities of the company are from continuing operations.
DNP Restaurants Ltd
Statement of financial position
31 December 2017
2017 2016
Note £ £ £ £
Fixed assets
Intangible assets 12 304,042 338,524
Tangible assets 13 4,335,433 3,111,679
Investments 14 8,750 8,750
_______ _______
4,648,225 3,458,953
Current assets
Stocks 15 166,035 118,662
Debtors 16 796,494 544,377
Cash at bank and in hand 422,016 441,792
_______ _______
1,384,545 1,104,831
Creditors: amounts falling due
within one year 17 ( 3,423,948) ( 2,465,219)
_______ _______
Net current liabilities ( 2,039,403) ( 1,360,388)
_______ _______
Total assets less current liabilities 2,608,822 2,098,565
Creditors: amounts falling due
after more than one year 18 ( 2,318,477) ( 1,698,079)
Provisions for liabilities 19 ( 183,160) ( 194,220)
_______ _______
Net assets 107,185 206,266
_______ _______
Capital and reserves
Called up share capital 22 100 100
Profit and loss account 23 107,085 206,166
_______ _______
Shareholders funds 107,185 206,266
_______ _______
These financial statements were approved by the board of directors and authorised for issue on 30 November 2018 , and are signed on behalf of the board by:
Mr D. Padmore
Director
Company registration number: 05420213
DNP Restaurants Ltd
Statement of cash flows
Year ended 31 December 2017
2017 2016
£ £
Cash flows from operating activities
Profit for the financial year 70,919 61,322
Adjustments for:
Depreciation of tangible assets 890,355 709,392
Amortisation of intangible assets 34,482 34,483
Other interest receivable and similar income - ( 648)
Interest payable and similar expenses 72,365 39,193
Tax on profit 45,126 33,731
Accrued expenses/(income) 117,621 ( 509,437)
Changes in:
Stocks ( 47,373) 13,017
Trade and other debtors ( 252,117) ( 256,381)
Trade and other creditors 408,035 141,081
_______ _______
Cash generated from operations 1,339,413 265,753
Interest paid ( 72,365) ( 39,193)
Interest received - 648
Tax paid 138,362 ( 20,276)
_______ _______
Net cash from operating activities 1,405,410 206,932
_______ _______
Cash flows from investing activities
Purchase of tangible assets ( 2,114,109) ( 1,022,178)
Purchase of intangible assets - ( 7,846)
_______ _______
Net cash used in investing activities ( 2,114,109) ( 1,030,024)
_______ _______
Cash flows from financing activities
Proceeds from borrowings 858,923 665,197
Equity dividends paid ( 170,000) ( 200,000)
_______ _______
Net cash from financing activities 688,923 465,197
_______ _______
Net increase/(decrease) in cash and cash equivalents ( 19,776) ( 357,895)
Cash and cash equivalents at beginning of year 441,792 799,687
_______ _______
Cash and cash equivalents at end of year 422,016 441,792
_______ _______
DNP Restaurants Ltd
Notes to the financial statements
Year ended 31 December 2017
1. General information
The company is a private company limited by shares, registered in England. The address of the registered office is McDonald's Restaurant, Ravenside Retail Park, Bexhill on Sea, East Sussex, TN40 2JS.
2. Statement of compliance
These financial statements have been prepared in compliance with FRS 102, 'The Financial Reporting Standard applicable in the UK and Republic of Ireland'.
3. Accounting policies
Basis of preparation
The financial statements have been prepared on the historical cost basis.
The financial statements are prepared in sterling, which is the functional currency of the entity.
Turnover
Turnover is measured at the fair value of the consideration received or receivable for goods supplied and services rendered, net of discounts and Value Added Tax.
Revenue from the sale of goods is recognised when the significant risks and rewards of ownership have transferred to the buyer, usually on despatch of the goods; the amount of revenue can be measured reliably; it is probable that the associated economic benefits will flow to the entity and the costs incurred or to be incurred in respect of the transactions can be measured reliably.
Taxation
The taxation expense represents the aggregate amount of current and deferred tax recognised in the reporting period. 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 capital and reserves. In this case, tax is recognised in other comprehensive income or directly in capital and reserves, respectively. Current tax is recognised on taxable profit for the current and past periods. Current tax is measured at the amounts of tax expected to pay or recover using the tax rates and laws that have been enacted or substantively enacted at the reporting date.
Deferred tax is recognised in respect of all timing differences at the reporting date. Unrelieved tax losses and other 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. Deferred tax is measured using the tax rates and laws that have been enacted or substantively enacted by the reporting date that are expected to apply to the reversal of the timing difference.
Operating leases
Lease payments are recognised as an expense over the lease term on a straight-line basis. The aggregate benefit of lease incentives is recognised as a reduction to expense over the lease term, on a straight-line basis.
Goodwill
Goodwill arises on business acquisitions and represents the excess of the cost of the acquisition over the company's interest in the net amount of the identifiable assets, liabilities and contingent liabilities of the acquired business. Goodwill is measured at cost less accumulated amortisation and accumulated impairment losses. It is amortised on a straight line basis over its useful life. Where a reliable estimate of the useful life of goodwill or intangible assets cannot be made, the life is presumed not to exceed ten years.
Intangible assets
Intangible assets are initially recorded at cost, and are subsequently stated at cost less any accumulated amortisation and impairment losses.
Amortisation
Amortisation is calculated so as to write off the cost of an asset, less its estimated residual value, over the useful life of that asset as follows:
Goodwill - 5 % straight line
Licence fees - 5 % straight line
Stamp duty - 5 % straight line
If there is an indication that there has been a significant change in amortisation rate, useful life or residual value of an intangible asset, the amortisation is revised prospectively to reflect the new estimates.
Tangible assets
tangible assets are initially recorded at cost, and are subsequently stated at cost less any accumulated depreciation and impairment losses.
Depreciation
Depreciation is calculated so as to write off the cost or valuation of an asset, less its residual value, over the useful economic life of that asset as follows:
Plant and equipment - 14.29 % straight line
Office equipment - 20 % straight line
If there is an indication that there has been a significant change in depreciation rate, useful life or residual value of tangible assets, the depreciation is revised prospectively to reflect the new estimates.
Fixed asset investments
Fixed asset investments are recorded at cost.
Impairment
A review for indicators of impairment is carried out at each reporting date, with the recoverable amount being estimated where such indicators exist. Where the carrying value exceeds the recoverable amount, the asset is impaired accordingly. Prior impairments are also reviewed for possible reversal at each reporting date.
When it is not possible to estimate the recoverable amount of an individual asset, an estimate is made of the recoverable amount of the cash-generating unit to which the asset belongs. The cash-generating unit is the smallest identifiable group of assets that includes the asset and generates cash inflows that are largely independent of the cash inflows from other assets or groups of assets.
Stocks
Stocks are measured at the lower of cost and estimated selling price less costs to complete and sell. Cost includes all costs of purchase, costs of conversion and other costs incurred in bringing the stocks to their present location and condition.
Provisions
Provisions are recognised when the entity has an obligation at the reporting date as a result of a past event; it is probable that the entity will be required to transfer economic benefits in settlement and the amount of the obligation can be estimated reliably. Provisions are recognised as a liability in the statement of financial position and the amount of the provision as an expense. Provisions are initially measured at the best estimate of the amount required to settle the obligation at the reporting date and subsequently reviewed at each reporting date and adjusted to reflect the current best estimate of the amount that would be required to settle the obligation. Any adjustments to the amounts previously recognised are recognised in profit or loss unless the provision was originally recognised as part of the cost of an asset. When a provision is measured at the present value of the amount expected to be required to settle the obligation, the unwinding of the discount is recognised in finance costs in profit or loss in the period it arises.
Financial instruments
A financial asset or a financial liability is recognised only when the company becomes a party to the contractual provisions of the instrument.
Basic financial instruments are initially recognised at the transaction price, unless the arrangement constitutes a financing transaction, where it is recognised at the present value of the future payments discounted at a market rate of interest for a similar debt instrument.
Debt instruments are subsequently measured at amortised cost.
Financial assets that are measured at cost or amortised cost are reviewed for objective evidence of impairment at the end of each reporting date. If there is objective evidence of impairment, an impairment loss is recognised in profit or loss immediately.
For all equity instruments regardless of significance, and other financial assets that are individually significant, these are assessed individually for impairment. Other financial assets or either assessed individually or grouped on the basis of similar credit risk characteristics.
Defined contribution plans
Contributions to defined contribution plans are recognised as an expense in the period in which the related service is provided.
4. Turnover
Turnover arises from:
2017 2016
£ £
Sale of goods 19,688,750 17,814,445
Sales of non-product items 290,305 282,307
_______ _______
19,979,055 18,096,752
_______ _______
The whole of the turnover is attributable to the principal activity of the company wholly undertaken in the United Kingdom.
5. Operating profit
Operating profit is stated after charging/(crediting):
2017 2016
£ £
Amortisation of intangible assets 34,482 34,483
Depreciation of tangible assets 890,355 709,392
Operating lease rentals 2,398,285 2,213,839
Fees payable for the audit of the financial statements 2,300 2,200
_______ _______
6. Staff costs
The average number of persons employed by the company during the year, including the director, amounted to:
2017 2016
Restaurant crew 315 313
Management and administration 23 22
_______ _______
338 335
_______ _______
The aggregate payroll costs incurred during the year were:
2017 2016
£ £
Wages and salaries 5,852,228 5,249,904
Social security costs 241,863 213,377
Other pension costs 16,985 19,424
_______ _______
6,111,076 5,482,705
_______ _______
7. Directors remuneration
The director's aggregate remuneration in respect of qualifying services was:
2017 2016
£ £
Remuneration 25,649 16,800
_______ _______
8. Other interest receivable and similar income
2017 2016
£ £
Bank deposits - 648
_______ _______
9. Interest payable and similar expenses
2017 2016
£ £
Other interest payable and similar expenses 72,365 39,193
_______ _______
10. Tax on profit
Major components of tax expense
2017 2016
£ £
Current tax:
UK current tax expense 56,186 53,106
Adjustments in respect of previous periods - ( 72)
_______ _______
Total current tax 56,186 53,034
Deferred tax:
Origination and reversal of timing differences ( 11,060) ( 19,303)
_______ _______
Tax on profit 45,126 33,731
_______ _______
Reconciliation of tax expense
The tax assessed on the profit for the year is higher than (2016: higher than) the standard rate of corporation tax in the UK of 19.00 % (2016: 20.00%).
2017 2016
£ £
Profit before taxation 116,045 95,053
_______ _______
Profit multiplied by rate of tax 22,049 19,011
Adjustments in respect of prior periods - ( 72)
Effect of capital allowances and depreciation 41,921 45,231
Deferred revenue expenditure claims ( 8,504) ( 11,136)
Change in corporation tax rate 720 -
Deferred taxation provision (11,060) (19,303)
_______ _______
Tax on profit 45,126 33,731
_______ _______
11. Dividends
Equity dividends
2017 2016
£ £
Dividends paid during the year (excluding those for which a liability existed at the end of the prior year) 170,000 200,000
_______ _______
12. Intangible assets
Goodwill Licence fees Stamp duty Total
£ £ £ £
Cost
At 1 January 2017 and 31 December 2017 416,627 210,000 65,628 692,255
_______ _______ _______ _______
Amortisation
At 1 January 2017 237,824 89,125 26,782 353,731
Charge for the year 20,832 10,500 3,150 34,482
_______ _______ _______ _______
At 31 December 2017 258,656 99,625 29,932 388,213
_______ _______ _______ _______
Carrying amount
At 31 December 2017 157,971 110,375 35,696 304,042
_______ _______ _______ _______
At 31 December 2016 178,803 120,875 38,846 338,524
_______ _______ _______ _______
Goodwill and licence fees are amortised over the franchise term of 20 years.
13. Tangible assets
Plant and equipment Office equipment Total
£ £ £
Cost
At 1 January 2017 6,415,914 1,465 6,417,379
Additions 2,114,109 - 2,114,109
Disposals ( 397,722) - ( 397,722)
_______ _______ _______
At 31 December 2017 8,132,301 1,465 8,133,766
_______ _______ _______
Depreciation
At 1 January 2017 3,305,148 552 3,305,700
Charge for the year 890,122 233 890,355
Disposals ( 397,722) - ( 397,722)
_______ _______ _______
At 31 December 2017 3,797,548 785 3,798,333
_______ _______ _______
Carrying amount
At 31 December 2017 4,334,753 680 4,335,433
_______ _______ _______
At 31 December 2016 3,110,766 913 3,111,679
_______ _______ _______
14. Investments
Other investments other than loans Total
£ £
Cost
At 1 January 2017 and 31 December 2017 8,750 8,750
_______ _______
Impairment
At 1 January 2017 and 31 December 2017 - -
_______ _______
Carrying amount
At 31 December 2017 8,750 8,750
_______ _______
At 31 December 2016 8,750 8,750
_______ _______
15. Stocks
2017 2016
£ £
Food, paper and non-product stocks 166,035 118,662
_______ _______
16. Debtors
2017 2016
£ £
Prepayments 214,766 344,518
Other debtors 581,728 199,859
_______ _______
796,494 544,377
_______ _______
17. Creditors: amounts falling due within one year
2017 2016
£ £
Bank loans and overdrafts 859,774 621,249
Trade creditors 932,612 628,071
Accruals 537,703 420,082
Corporation tax 247,654 53,106
Social security and other taxes 841,803 714,720
Other creditors 4,402 27,991
_______ _______
3,423,948 2,465,219
_______ _______
18. Creditors: amounts falling due after more than one year
2017 2016
£ £
Bank loans and overdrafts 2,318,477 1,698,079
_______ _______
Included within creditors: amounts falling due after more than one year is an amount of £ 428,572 (2016 £ 55,491 ) in respect of liabilities payable or repayable by instalments which fall due for payment after more than five years from the reporting date.
Bank loans consist of unsecured loans with HSBC plc, repayable by instalments over 7 years and with interest charged at 1.38% above base. The ultimate repayment date of the loan will be June 2022.
19. Provisions
Deferred tax (note 20) Total
£ £
At 1 January 2017 194,220 194,220
Additions ( 11,060) ( 11,060)
_______ _______
At 31 December 2017 183,160 183,160
_______ _______
20. Deferred tax
The deferred tax included in the statement of financial position is as follows:
2017 2016
£ £
Included in provisions (note 19) 183,160 194,220
_______ _______
The deferred tax account consists of the tax effect of timing differences in respect of:
2017 2016
£ £
Accelerated capital allowances 183,160 194,220
_______ _______
21. Employee benefits
The amount recognised in profit or loss in relation to defined contribution plans was £ 16,985 (2016: £ 19,424 ).
22. Called up share capital
Issued, called up and fully paid
2017 2016
No £ No £
Ordinary shares shares of £ 1.00 each 100 100 100 100
_______ _______ _______ _______
23. Reserves
Profit and loss account:This reserve records retained earnings and accumulated losses.
24. Operating leases
The company as lessee
The total future minimum lease payments under non-cancellable operating leases are as follows:
£ £
Not later than 1 year 678,328 678,328
Later than 1 year and not later than 5 years 2,685,933 2,699,641
Later than 5 years 3,482,172 4,146,792
_______ _______
6,846,433 7,524,761
_______ _______
25. Directors advances, credits and guarantees
During the year the director entered into the following advances and credits with the company:
2017
Balance brought forward Advances /(credits) to the director Balance o/standing
£ £ £
Mr D. Padmore 161,384 262,551 423,935
_______ _______ _______
2016
Balance brought forward Advances /(credits) to the director Balance o/standing
£ £ £
Mr D. Padmore ( 21,450) 182,834 161,384
_______ _______ _______
26. Controlling party
The ultimate controlling party is Mr D.Padmore, being the sole director and majority shareholder.