Company Registration No. 05018441 (England and Wales)
LEON RESTAURANTS LIMITED
ANNUAL REPORT AND FINANCIAL STATEMENTS
FOR THE 52 WEEK PERIOD ENDED
25 DECEMBER 2022
25 December 2022
PM+M Solutions for Business LLP
Chartered Accountants
New Century House
Greenbank Technology Park
Challenge Way
Blackburn
Lancashire
BB1 5QB
LEON RESTAURANTS LIMITED
COMPANY INFORMATION
Directors
Mr Z Issa
Mr M Issa
Secretary
Mr I M Patel
Company number
05018441
Registered office
Waterside Head Office
Haslingden Road
Guide
Blackburn
Lancashire
United Kingdom
BB1 2FA
Auditor
PM+M Solutions for Business LLP
New Century House
Greenbank Technology Park
Challenge Way
Blackburn
Lancashire
BB1 5QB
LEON RESTAURANTS LIMITED
CONTENTS
Page
Strategic report
1 - 5
Directors' report
6 - 8
Independent auditor's report
9 - 12
Statement of comprehensive income
13
Balance sheet
14
Statement of changes in equity
15
Notes to the financial statements
16 - 31
LEON RESTAURANTS LIMITED
STRATEGIC REPORT
FOR THE 52 WEEK PERIOD ENDED 25 DECEMBER 2022
- 1 -
The directors present the strategic report for the 52 week period ended 25 December 2022.
Purpose Values and Culture
LEON continues to be a pioneer in the rapidly evolving contemporary fast-food market, and we refer to our offering as "naturally fast food".
Our mission is to make it easier for everyone to eat and live well. We are focused on creating and selling fast food that:
We believe that our eat and live well mission must be true for our team members, as well as our customers.
We feed all our LEON family when they are at work.
We believe that everyone should be rewarded fairly and equally for the work they do. We do not use the lower bands of the National Minimum Wage for hourly paid team members but instead pay all team members at least the over 25's adult rate of the National Living Wage from the start, regardless of their age.
Our customers and teams must enjoy what we offer with the highest expectations of safety and responsibility with respect to the food we serve, and the physical environment in which it is served. Now more than ever, this is a fundamental principle underpinning everything we do.
As a naturally fast-food business, being kind to the planet is in our mission and is something we put importance on within the business, with customers and with our partners.
LEON is a founding member of the Sustainable Restaurant Association (SRA) which exists to help restaurants become more sustainable in the way they source their ingredients, engage with the local community, and manage their impact on the environment.
Food sourcing & coffee
We believe in natural ingredients that are good for you and sourcing them in a way that is good for the planet.
We have clearly defined food values, and our suppliers are required to comply with our detailed requirements. We source from farmers who meet high animal welfare standards, and we visit the farms which supply our meat and dairy produce. Our milk for example is sourced from a co-operative of organic farms in Wales. We serve only sustainably caught or sustainably farmed fish. We serve coffee that is organic, fair trade and that supports rainforests through the World Land Trust (WLT).
LEON RESTAURANTS LIMITED
STRATEGIC REPORT (CONTINUED)
FOR THE 52 WEEK PERIOD ENDED 25 DECEMBER 2022
- 2 -
A menu which is increasingly plant based
One of our key objectives is to increase the amount of plant-based food we offer. Since we began in 2004, we have believed in the importance of plants and rely on natural herbs more than processing to flavour our meals.
Our strategy is to introduce packaging wherever possible made from materials that have an available recycling stream thereby increasing demand for recycled packaging products.
Another key objective is to ensure we source our energy sustainably and use it responsibly. A majority of our restaurants (wherever we buy the electricity ourselves) are powered by a 100% renewable UK energy and we do not use gas, only electricity. We have as much as possible sought out energy efficient equipment, for example moving to LED lighting.
People
This third area of our sustainability commitment is people. LEON is committed to training our teams. Continuing to look after team’s well-being, an Employee Assistance Program has provided 24 hour mental health support to our team members.
Streamlined Energy and Carbon Reporting (SECR)
The non-renewable energy sources used across our operations create greenhouse gases. We are committed to reducing our consumption wherever we can and seek renewable energy alternatives and we will continue to monitor our usage and perform analysis to improve the accuracy and provision of the results to allow us to set meaningful reduction targets in the year ahead.
We report on our Greenhouse Gas (“GHG”) emissions of our business in line with our obligations as a Large Private Company under The Companies (Directors’ Report) and Limited Liability Partnerships (Energy and Carbon Report) Regulations 2018, which implement the Government’s Streamlined Energy & Carbon Reporting regulations.
The methodology used to calculate our GHG emissions and energy use is in accordance with the GHG Protocol Corporate Accounting and Reporting Standard (revised edition) and ISO 14064.
The company has taken the exemption available to subsidiary companies not to disclose information in respecof greenhouse gas emissions, energy consumption and energy efficiency action given this is disclosed in the consolidated financial statements of the ultimate parent company, EG Group Limited. The 2022 annual report can be located on our website at https://www.eg.group/investors/results-reports-presentations/?year=2022
It remains a key objective to ensure we source our energy sustainably and use it responsibly; this has even more focus in the business, given the recent exceptional price inflation seen in the energy markets.
LEON RESTAURANTS LIMITED
STRATEGIC REPORT (CONTINUED)
FOR THE 52 WEEK PERIOD ENDED 25 DECEMBER 2022
- 3 -
Business Model and Strategy
Our long-term strategy is based on our mission to enable as many as possible to eat and live well. We will continue our UK expansion and to develop the brand in new markets and new formats.
Review of the business including Key Performance Indicators (KPI's)
Throughout 2022, the business saw continued recovery from Covid-19. Weekly sales and footfall to our restaurants improved week by week, although the year remained challenging. Covid-19 restrictions were eased at the beginning of the financial year; however, the economy began to slow down, which was exacerbated by the war in Ukraine. This led to inflationary pressures, particularly seen with electricity costs and cost of sales.
Industrial action, particularly rail and tube strikes, further affected the business, given the location of many LEON restaurants to transport hubs, resulted in lower footfall and sales on strike days. Furthermore, working-from-home trend has impacted many LEON restaurants, particularly ones based in office centric locations, and these have seen a slower recovery.
Management remain confident that sales will continue to recover, and this is supported by continual improvement seen throughout 2023
In December 2020, the company entered into a two year Company Voluntary Arrangement “CVA”. This was then terminated in February 2023.
The net liability position at the end of the financial period totalled £9,413,531 (2021: net assets £5,494,147).
Key financial and other KPl's
Revenue growth for Leon owned sites, on a like for like basis, is 19.3%. In the year there were fourteen Leon owned openings (2021: 5), together with three (2021: 2) new franchise units. In the year there were two owned restaurant closure plus two dark kitchen locations (2021: 3), along with three (2021: 2) franchise closures.
Key performance indicator | | | |
Revenue from All Leon Sites (1) | | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
Notes:
Revenue from all LEON sites represents the total sales from both owned and franchise sites.
Total revenue represents total revenue from owned sites plus franchise royalty and licence income.
Adjusted EBITDA is operating loss adjusted for the add back of: depreciation, amortisation, exceptional items including impairment and onerous lease provision, preopening costs and top up of furlough salary.
LEON RESTAURANTS LIMITED
STRATEGIC REPORT (CONTINUED)
FOR THE 52 WEEK PERIOD ENDED 25 DECEMBER 2022
- 4 -
Key risks and uncertainties
The company regularly assesses the significant risks faced and acts where appropriate to mitigate their potential impact.
In addition other risks and uncertainties are as follows:
Labour shortages and team availability to meet future growth plans, especially in London and the Southeast of England. Digitalisation of our restaurants will help to offset some risk, and demand for additional team. We are also reviewing our pay, benefits, and training to ensure that we keep and attract team to Leon.
Inflationary pressures. The business continues to work with suppliers to manage the increasing cost base. The LEON management team review the menu on a regularly basis, the seasonal menu update allows the team to remove / add products to maintain margins. The business use advisors to manage electricity contracts and is actively looking at ways to reduce consumption.
Current trading and outlook
Trading continues to recover from the impact of covid-19 pandemic. Management will continue to actively open new restaurants, as well as reviewing the existing estate performance, and explore new formats and opportunities.
Section 172(1) statement
This section describes how the directors have had regard to the matters set out in section 172(1) Companies Act 2006 in exercising their duty to promote the success of the company for the benefit of all stakeholders.
The Board seeks to understand the respective interests of such stakeholder groups so that these may be properly considered in the Board’s decisions. This is achieved through various methods, including: direct engagement by Board members; receiving reports and updates from the management team who engage with such groups; and discussions in Board meetings of relevant stakeholder interests with regard to proposed courses of action.
Employees
The Directors recognise that Leon employees are fundamental and core to our business and delivery of our strategic ambitions. The success of our business depends on attracting, retaining, and motivating employees. The Directors factor the implications of decisions on employees where relevant. Employees are kept informed of performance and strategy through regular presentations and updates from members of the management team.
Customers
Our mission is to make it easier for everyone to eat and live well. We are focused on creating and selling fast food that tastes great, naturally, is remarkably good for you, leaves you feeling good after you've eaten it and is affordable. We regularly engage with our customers across several social media platforms and operate the LEON Club for customers who wish to engage further.
Suppliers
Delivering our strategy requires strong mutually beneficial relationships with suppliers.
Environment
As a naturally fast-food business, being kind to the planet is in our mission and is something we put importance on within the business, with customers and with our partners.
LEON RESTAURANTS LIMITED
STRATEGIC REPORT (CONTINUED)
FOR THE 52 WEEK PERIOD ENDED 25 DECEMBER 2022
- 5 -
Financial Risks
Credit risk
Trade receivables predominately arise from the franchising businesses. The board do not believe that there is a high risk, as the amounts are immaterial to the overall company’s operation.
Liquidity risk
Cash forecasts are produced frequently and regularly reviewed to manage liquidity.
Future developments
It is the Board's intention to continue the development of the business, with a view to achieve the following:
The Board wish to thank all our LEON family teams for their dedication and hard work.
Mr Z Issa
Director
30 October 2023
LEON RESTAURANTS LIMITED
DIRECTORS' REPORT
FOR THE 52 WEEK PERIOD ENDED 25 DECEMBER 2022
- 6 -
The directors present their annual report and financial statements for the 52 week period ended 25 December 2022.
Results and dividends
The statement of comprehensive income for the 52-week period is set out on page 13. The directors do not recommend payment of a dividend (2021: nil).
Future developments and financial risks of the company are included in the Strategic Report.
Directors
The directors who held office during the 52 week period and up to the date of signature of the financial statements were as follows:
Mr Z Issa
Mr M Issa
Disabled persons
The company's policy is to recruit disabled workers for those vacancies that they are able to fill. All necessary assistance with initial training courses is given. Once employed, a career plan is developed so as to ensure suitable opportunities for each disabled person. Arrangements are made, wherever possible, for retraining employees who become disabled, to enable them to perform work identified as appropriate to their aptitudes and abilities.
Employee involvement
The company's policy is to consult and discuss with employees matters likely to affect their interests and their day-today wellbeing. We keep our family informed through regular team meetings and sharing of financial performance reports which seek to achieve a common awareness of the financial economic and other factors affecting our business.
Business relationships
We recognise the importance of positive engagement with all stakeholders. We aim to maintain strong relationships with our key suppliers, and our landlords. We have the same positive dialogue and engagement with sector regulatory organisations.
Our Guest Happiness team are at the forefront of our customer engagement, and we also use social media to speak with our wider circle of friends.
Auditor
KPMG LLP has resigned as auditor to the company and PM+M Solutions for Business LLP have been appointed auditor by the directors during the period.
Energy and carbon report
The company has chosen in accordance with Companies Act 2006, s. 414C(11) to set out in the company's strategic report information required by Large and Medium-sized Companies and Groups (Accounts and Reports) Regulations 2008, Sch. 7 to be contained in the directors' report.
LEON RESTAURANTS LIMITED
DIRECTORS' REPORT (CONTINUED)
FOR THE 52 WEEK PERIOD ENDED 25 DECEMBER 2022
- 7 -
Statement of directors' responsibilities
The directors are responsible for preparing the Annual Report and the financial statements in accordance with applicable law and regulation.
Company law requires the directors to prepare financial statements for each financial year. Under that law the directors have prepared the company financial statements in accordance with United Kingdom Generally Accepted Accounting Practice (United Kingdom Accounting Standards, comprising FRS 102 “The Financial Reporting Standard applicable in the UK and Republic of Ireland”, and applicable law).
Under company law, 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 the financial statements, the directors are required to:
select suitable accounting policies and then apply them consistently;
state whether applicable United Kingdom Accounting Standards, comprising FRS 102 have been followed, subject to any material departures disclosed and explained in the financial statements;
make judgements 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 directors 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 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
Financial instruments
Details of the company’s financial instruments are disclosed in notes 17-19 of the financial statements.
Political contributions
The company made no disclosable political donations or incurred any disclosable political expenditure during the year.
Directors’ confirmations
In the case of each director in office at the date the directors’ report is approved:
Statement of disclosure to auditor
So far as each person who was a director at the date of approving this report is aware, there is no relevant audit information of which the company’s auditor is unaware. Additionally, the directors individually have taken all the necessary steps that they ought to have taken as directors in order to make themselves aware of all relevant audit information and to establish that the company’s auditor is aware of that information.
LEON RESTAURANTS LIMITED
DIRECTORS' REPORT (CONTINUED)
FOR THE 52 WEEK PERIOD ENDED 25 DECEMBER 2022
- 8 -
On behalf of the board
Mr Z Issa
Director
30 October 2023
LEON RESTAURANTS LIMITED
INDEPENDENT AUDITOR'S REPORT
TO THE MEMBERS OF LEON RESTAURANTS LIMITED
- 9 -
Opinion
We have audited the financial statements of Leon Restaurants Limited (the 'company') for the 52 week period ended 25 December 2022 which comprise the statement of comprehensive income, the balance sheet, the statement of changes in equity and notes to the financial statements, including significant accounting policies. The financial reporting framework that has been applied in their preparation is applicable law and United Kingdom Accounting Standards, including Financial Reporting Standard 102 The Financial Reporting Standard applicable in the UK and Republic of Ireland (United Kingdom Generally Accepted Accounting Practice).
In our opinion the financial statements:
give a true and fair view of the state of the company's affairs as at 25 December 2022 and of its loss for the 52 week 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.
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 opinion.
Conclusions relating to going concern
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.
The other information comprises the information included in the annual report other than the financial statements and our auditor's report thereon. The directors are responsible for the other information contained within the annual report. Our opinion on the financial statements does not cover the other information and, except to the extent otherwise explicitly stated in our report, we do not express any form of assurance conclusion thereon. Our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the course of the audit, or otherwise appears to be materially misstated. If we identify such material inconsistencies or apparent material misstatements, we are required to determine whether this gives rise to a material misstatement in the financial statements themselves. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact.
We have nothing to report in this regard.
Opinions on other matters prescribed by the Companies Act 2006
In our opinion, based on the work undertaken in the course of our audit:
the information given in the strategic report and the directors' report for the financial 52 week period 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.
LEON RESTAURANTS LIMITED
INDEPENDENT AUDITOR'S REPORT (CONTINUED)
TO THE MEMBERS OF LEON RESTAURANTS LIMITED
- 10 -
Matters on which we are required to report by exception
In the light of the knowledge and understanding of the company and its environment obtained in the course of the audit, we have not identified material misstatements in the strategic report or the directors' report.
We have nothing to report in respect of the following matters in relation to which the Companies Act 2006 requires us to report to you if, in our opinion:
adequate accounting records have not been kept, or returns adequate for our audit have not been received from branches not visited by us; or
the financial statements are not in agreement with the accounting records and returns; or
certain disclosures of remuneration specified by law are not made; or
we have not received all the information and explanations we require for our audit.
Responsibilities of directors
As explained more fully in the directors' responsibilities statement, the directors are responsible for the preparation of the financial statements and for being satisfied that they give a true and fair view, and for such internal control as the directors determine is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error. In preparing the financial statements, the directors are responsible for assessing the 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.
Auditor's responsibilities for the audit of the financial statements
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor's report that includes our opinion. Reasonable assurance is a high level of assurance but is not a guarantee that an audit conducted in accordance with ISAs (UK) will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements.
Extent to which the audit was considered capable of detecting irregularities, including fraud
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 identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, and then design and perform audit procedures responsive to those risks, including obtaining audit evidence that is sufficient and appropriate to provide a basis for our opinion.
LEON RESTAURANTS LIMITED
INDEPENDENT AUDITOR'S REPORT (CONTINUED)
TO THE MEMBERS OF LEON RESTAURANTS LIMITED
- 11 -
Identifying and assessing potential risks related to irregularities
In identifying and assessing risks of material misstatement in respect of irregularities, including fraud and non-compliance with laws and regulations, we have considered the following:
the nature of the industry and sector, control environment and business performance including the design of the company's remuneration policies, key drivers for directors’ remuneration, bonus levels and performance targets;
results of our enquiries of management about their own identification and assessment of the risks of irregularities;
the matters discussed among the audit engagement team and relevant specialists regarding how and where fraud might occur in the financial statements and any potential indicators of fraud;
any matters we identified having obtained and reviewed the company's documentation of their policies and procedures relating to:
identifying, evaluating and complying with laws and regulations and whether they were aware of any instances of non-compliance;
detecting and responding to the risks of fraud and whether they have knowledge of any actual, suspected or alleged fraud;
the internal controls established to mitigate risks of fraud or non-compliance with laws and regulations.
As a result of these procedures, we considered the opportunities and incentives that may exist within the organisation for fraud and identified the greatest potential for fraud in the following areas: timing of recognition of commercial income, posting of unusual journals and complex transactions; and manipulating the company's performance profit measures and other key performance indicators to meet remuneration targets and externally communicated targets. In common with all audits under ISAs (UK), we are also required to perform specific procedures to respond to the risk of management override.
We also obtained an understanding of the legal and regulatory frameworks that the company operates in, focusing on provisions of those laws and regulations that had a direct effect on the determination of material amounts and disclosures in the financial statements. The key laws and regulations we considered in this context included UK Companies Act, employment law, health and safety regulations, pensions legislation and tax legislation.
Audit response to risks identified
Our procedures to respond to risks identified included the following:
reviewing the financial statement disclosures and testing to supporting documentation to assess compliance with provisions of relevant laws and regulations described as having a direct effect on the financial statements;
enquiring of management concerning actual and potential litigation and claims;
performing analytical procedures to identify any unusual or unexpected relationships that may indicate risks of material misstatement due to fraud;
reading minutes of meetings of those charged with governance and reviewing correspondence with HMRC; and
in addressing the identified risks of fraud through management override of controls, testing the appropriateness of journal entries and other adjustments; assessing whether the judgements made in making accounting estimates are indicative of a potential bias; and evaluating the business rationale of any significant transactions that are unusual or outside the normal course of business.
Owing to the inherent limitations of an audit, there is an unavoidable risk that we may not have detected some material misstatements in the financial statements, even though we have properly planned and performed our audit in accordance with auditing standards. For example, the further removed non-compliance with laws and regulations (irregularities) is from the events and transactions reflected in the financial statements, the less likely the inherently limited procedures required by auditing standards would identify it. In addition, as with any audit, there remained a higher risk of non-detection of irregularities, as these may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal controls. We are not responsible for preventing non-compliance and cannot be expected to detect non-compliance with all laws and regulations.
LEON RESTAURANTS LIMITED
INDEPENDENT AUDITOR'S REPORT (CONTINUED)
TO THE MEMBERS OF LEON RESTAURANTS LIMITED
- 12 -
A further description of our responsibilities is available on the Financial Reporting Council’s website at: https://www.frc.org.uk/auditorsresponsibilities. This description forms part of our auditor's 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 an auditor's report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the company and the company's members as a body, for our audit work, for this report, or for the opinions we have formed.
Miss Helen Louise Clayton BSc FCA
Senior Statutory Auditor
For and on behalf of PM+M Solutions for Business LLP
30 October 2023
Chartered Accountants
Statutory Auditor
New Century House
Greenbank Technology Park
Challenge Way
Blackburn
Lancashire
BB1 5QB
LEON RESTAURANTS LIMITED
STATEMENT OF COMPREHENSIVE INCOME
FOR THE 52 WEEK PERIOD ENDED 25 DECEMBER 2022
- 13 -
52 week period
52 week period
ended
ended
25 December
26 December
2022
2021
Notes
£
£
Turnover
3
52,179,430
37,515,376
Cost of sales
(18,795,990)
(12,666,069)
Gross profit
33,383,440
24,849,307
Administrative expenses before exceptional items
(43,054,599)
(28,371,442)
Exceptional item
4
(2,971,832)
(5,078,173)
Administrative expenses
(46,026,431)
(33,449,615)
Other operating income
1,145,304
Operating loss
5
(12,642,991)
(7,455,004)
Interest receivable and similar income
9
-
10,744
Interest payable and similar expenses
10
(625,106)
(1,733,082)
Loss before taxation
(13,268,097)
(9,177,342)
Tax on loss
11
(1,639,581)
(60,419)
Loss for the financial 52 week period
(14,907,678)
(9,237,761)
The profit and loss account has been prepared on the basis that all operations are continuing operations.
LEON RESTAURANTS LIMITED
BALANCE SHEET
AS AT 25 DECEMBER 2022
25 December 2022
- 14 -
25 December 2022
26 December 2021
Notes
£
£
£
£
Fixed assets
Intangible assets
12
14,905
38,117
Tangible assets
13
20,784,968
11,996,508
Investments
14
1,300,200
1,300,200
22,100,073
13,334,825
Current assets
Stocks
16
472,628
297,073
Debtors
17
4,880,291
4,314,687
Cash at bank and in hand
3,503,212
3,562,347
8,856,131
8,174,107
Creditors: amounts falling due within one year
18
(16,018,414)
(12,465,507)
Net current liabilities
(7,162,283)
(4,291,400)
Total assets less current liabilities
14,937,790
9,043,425
Creditors: amounts falling due after more than one year
19
(22,854,526)
(3,549,278)
Provisions for liabilities
Provisions
20
1,496,795
(1,496,795)
-
Net (liabilities)/assets
(9,413,531)
5,494,147
Capital and reserves
Called up share capital
23
374,873
374,873
Share premium account
24
27,182,810
27,182,810
Other reserves
16,082,274
16,082,274
Profit and loss reserves
26
(53,053,488)
(38,145,810)
Total equity
(9,413,531)
5,494,147
The financial statements were approved by the board of directors and authorised for issue on 30 October 2023 and are signed on its behalf by:
Mr Z Issa
Director
Company Registration No. 05018441
LEON RESTAURANTS LIMITED
STATEMENT OF CHANGES IN EQUITY
FOR THE 52 WEEK PERIOD ENDED 25 DECEMBER 2022
- 15 -
Share capital
Share premium account
Other reserves
Profit and loss reserves
Total
£
£
£
£
£
Balance at 1 January 2021
384,524
27,182,810
-
(28,908,049)
(1,340,715)
Period ended 26 December 2021:
Loss and total comprehensive income for the period
-
-
-
(9,237,761)
(9,237,761)
Share cancellation
(9,651)
-
(9,651)
Capital contribution
-
-
16,082,274
16,082,274
Balance at 26 December 2021
374,873
27,182,810
16,082,274
(38,145,810)
5,494,147
Period ended 25 December 2022:
Loss and total comprehensive income for the period
-
-
-
(14,907,678)
(14,907,678)
Balance at 25 December 2022
374,873
27,182,810
16,082,274
(53,053,488)
(9,413,531)
LEON RESTAURANTS LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE 52 WEEK PERIOD ENDED 25 DECEMBER 2022
- 16 -
1
Accounting policies
Company information
Leon Restaurants Limited is a private company limited by shares incorporated in England and Wales. The registered office is Waterside Head Office, Haslingden Road, Guide, Blackburn, Lancashire, United Kingdom, BB1 2FA.
1.1
Accounting convention
These financial statements have been prepared in accordance with FRS 102 “The Financial Reporting Standard applicable in the UK and Republic of Ireland” (“FRS 102”) and the requirements of the Companies Act 2006.
The financial statements are prepared in sterling, which is the functional currency of the company. Monetary amounts in these financial statements are rounded to the nearest £.
The financial statements have been prepared under the historical cost convention. The principal accounting policies adopted are set out below.
This company is a qualifying entity for the purposes of FRS 102, being a member of a group where the parent of that group prepares publicly available consolidated financial statements, including this company, which are intended to give a true and fair view of the assets, liabilities, financial position and profit or loss of the group. The company has therefore taken advantage of exemptions from the following disclosure requirements:
Section 7 ‘Statement of Cash Flows’: Presentation of a statement of cash flow and related notes and disclosures;
Section 11 ‘Basic Financial Instruments’ and Section 12 ‘Other Financial Instrument Issues: Interest income/expense and net gains/losses for financial instruments not measured at fair value; basis of determining fair values; details of collateral, loan defaults or breaches, details of hedges, hedging fair value changes recognised in profit or loss and in other comprehensive income;
Section 33 ‘Related Party Disclosures’: Compensation for key management personnel.
The financial statements of the company are consolidated in the financial statements of EG Group Limited. These consolidated financial statements are available from its registered office, Waterside Head Office, Haslingden Road, Guide, Blackburn, Lancashire, United Kingdom, BB1 2FA.
1.2
Going concern
The Directors of the company have considered the appropriateness of the basis of going concern to the financial statements following a detailed review of the risks and not withstanding the loss for the year of £14.9m. The company has taken steps to respond to the challenging trading environment post-COVID, including reducing its cost base and restaurant portfolio.
The company's current financing is through a five year term loan from a fellow group company, EG Finco Limited, details of which are disclosed in note 19 to the financial statements.
The directors have prepared cash flow forecasts and performed a going concern assessment which indicates that, in both the base and possible downsides, the company will require additional funds through funding from its fellow subsidiary company, Euro Garages Limited, to meet its liabilities as they fall due during twelve month going concern assessment period from the date of approval of these financial statements. They have no reason to believe that it will not do so.
Consequently, the directors are confident that the company will have sufficient funds to continue to meet its liabilities as they fall due for at least 12 months from the date of approval of the financial statements and therefore have prepared the financial statements on a going concern basis.
LEON RESTAURANTS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE 52 WEEK PERIOD ENDED 25 DECEMBER 2022
1
Accounting policies
(Continued)
- 17 -
1.3
Turnover
Turnover is recognised at the fair value of the consideration received or receivable for goods and services provided in the normal course of business, and is shown net of VAT and other sales related taxes. The fair value of consideration takes into account trade discounts, settlement discounts and volume rebates.
i) Restaurant turnover
Turnover shown in the profit and loss account represents the value of goods and services provided net of discounts during the period, stated net of value added tax. Turnover is recognised at the point of the sale.
ii) Franchise turnover
Franchise turnover comprise of on-going royalty fees based on an agreed percentage, recognised over time and up-front signing fees, recognised at a point in time when agreed.
iii) Other royalties
Other royalties comprise of on-going fees based on an agreed percentage for licenses products, recognised when the related sales are reported.
1.4
Intangible fixed assets other than goodwill
Intangible assets acquired separately from a business are recognised at cost and are subsequently measured at cost less accumulated amortisation and accumulated impairment losses.
Amortisation is recognised so as to write off the cost or valuation of assets less their residual values over their useful lives on the following bases:
Trademarks
Up to 10 years
1.5
Tangible fixed assets
Tangible fixed assets are initially measured at cost and subsequently measured at cost or valuation, net of depreciation and any impairment losses.
Depreciation is recognised so as to write off the cost or valuation of assets less their residual values over their useful lives on the following bases:
Leasehold land and buildings
Over the period of the lease
Restaurant and office equipment
Over 5 years
The gain or loss arising on the disposal of an asset is determined as the difference between the sale proceeds and the carrying value of the asset, and is credited or charged to profit or loss.
1.6
Fixed asset investments
Interests in subsidiaries, associates and jointly controlled entities are initially measured at cost and subsequently measured at cost less any accumulated impairment losses. The investments are assessed for impairment at each reporting date and any impairment losses or reversals of impairment losses are recognised immediately in profit or loss.
A subsidiary is an entity controlled by the company. Control is the power to govern the financial and operating policies of the entity so as to obtain benefits from its activities.
An associate is an entity, being neither a subsidiary nor a joint venture, in which the company holds a long-term interest and where the company has significant influence. The company considers that it has significant influence where it has the power to participate in the financial and operating decisions of the associate.
LEON RESTAURANTS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE 52 WEEK PERIOD ENDED 25 DECEMBER 2022
1
Accounting policies
(Continued)
- 18 -
Entities in which the company has a long term interest and shares control under a contractual arrangement are classified as jointly controlled entities.
1.7
Impairment of fixed assets
At each reporting period end date, the company reviews the carrying amounts of its tangible and intangible assets to determine whether there is any indication that those assets have suffered an impairment loss. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment loss (if any). Where it is not possible to estimate the recoverable amount of an individual asset, the company estimates the recoverable amount of the cash-generating unit to which the asset belongs.
Recoverable amount is the higher of fair value less costs to sell and value in use. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset for which the estimates of future cash flows have not been adjusted.
If the recoverable amount of an asset (or cash-generating unit) is estimated to be less than its carrying amount, the carrying amount of the asset (or cash-generating unit) is reduced to its recoverable amount. An impairment loss is recognised immediately in profit or loss, unless the relevant asset is carried at a revalued amount, in which case the impairment loss is treated as a revaluation decrease.
Recognised impairment losses are reversed if, and only if, the reasons for the impairment loss have ceased to apply. Where an impairment loss subsequently reverses, the carrying amount of the asset (or cash-generating unit) is increased to the revised estimate of its recoverable amount, but so that the increased carrying amount does not exceed the carrying amount that would have been determined had no impairment loss been recognised for the asset (or cash-generating unit) in prior years. A reversal of an impairment loss is recognised immediately in profit or loss, unless the relevant asset is carried at a revalued amount, in which case the reversal of the impairment loss is treated as a revaluation increase.
1.8
Stocks
Stocks are stated at the lower of cost and estimated selling price less costs to complete and sell. Cost comprises direct materials and, where applicable, direct labour costs and those overheads that have been incurred in bringing the stocks to their present location and condition.
1.9
Cash and cash equivalents
Cash and cash equivalents are basic financial assets and include cash in hand, deposits held at call with banks, other short-term liquid investments with original maturities of three months or less, and bank overdrafts. Bank overdrafts are shown within borrowings in current liabilities.
1.10
Financial instruments
The company has elected to apply the provisions of Section 11 ‘Basic Financial Instruments’ and Section 12 ‘Other Financial Instruments Issues’ of FRS 102 to all of its financial instruments.
Financial instruments are recognised in the company's balance sheet when the company becomes party to the contractual provisions of the instrument.
Financial assets and liabilities are offset, with the net amounts presented in the financial statements, when there is a legally enforceable right to set off the recognised amounts and there is an intention to settle on a net basis or to realise the asset and settle the liability simultaneously.
LEON RESTAURANTS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE 52 WEEK PERIOD ENDED 25 DECEMBER 2022
1
Accounting policies
(Continued)
- 19 -
Basic financial assets
Basic financial assets, which include debtors and cash and bank balances, are initially measured at transaction price including transaction costs and are subsequently carried at amortised cost using the effective interest method unless the arrangement constitutes a financing transaction, where the transaction is measured at the present value of the future receipts discounted at a market rate of interest. Financial assets classified as receivable within one year are not amortised.
Derecognition of financial assets
Financial assets are derecognised only when the contractual rights to the cash flows from the asset expire or are settled, or when the company transfers the financial asset and substantially all the risks and rewards of ownership to another entity, or if some significant risks and rewards of ownership are retained but control of the asset has transferred to another party that is able to sell the asset in its entirety to an unrelated third party.
Classification of financial liabilities
Financial liabilities and equity instruments are classified according to the substance of the contractual arrangements entered into. An equity instrument is any contract that evidences a residual interest in the assets of the company after deducting all of its liabilities.
Basic financial liabilities
Basic financial liabilities, including creditors and loans from fellow group companies that are classified as debt, are initially recognised at transaction price unless the arrangement constitutes a financing transaction, where the debt instrument is measured at the present value of the future payments discounted at a market rate of interest. Financial liabilities classified as payable within one year are not amortised.
Debt instruments are subsequently carried at amortised cost, using the effective interest rate method.
Trade creditors are obligations to pay for goods or services that have been acquired in the ordinary course of business from suppliers. Amounts payable are classified as current liabilities if payment is due within one year or less. If not, they are presented as non-current liabilities. Trade creditors are recognised initially at transaction price and subsequently measured at amortised cost using the effective interest method.
Derecognition of financial liabilities
Financial liabilities are derecognised when the company’s contractual obligations expire or are discharged or cancelled.
1.11
Taxation
The tax expense represents the sum of the tax currently payable and deferred tax.
Current tax
The tax currently payable is based on taxable profit for the year. Taxable profit differs from net profit as reported in the profit and loss account because it excludes items of income or expense that are taxable or deductible in other years and it further excludes items that are never taxable or deductible. The company’s liability for current tax is calculated using tax rates that have been enacted or substantively enacted by the reporting end date.
LEON RESTAURANTS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE 52 WEEK PERIOD ENDED 25 DECEMBER 2022
1
Accounting policies
(Continued)
- 20 -
Deferred tax
Deferred tax liabilities are generally recognised for all timing differences and deferred tax assets are recognised to the extent that it is probable that they will be recovered against the reversal of deferred tax liabilities or other future taxable profits. Such assets and liabilities are not recognised if the timing difference arises from goodwill or from the initial recognition of other assets and liabilities in a transaction that affects neither the tax profit nor the accounting profit.
The carrying amount of deferred tax assets is reviewed at each reporting end date and reduced to the extent that it is no longer probable that sufficient taxable profits will be available to allow all or part of the asset to be recovered. Deferred tax is calculated at the tax rates that are expected to apply in the period when the liability is settled or the asset is realised. Deferred tax is charged or credited in the profit and loss account, except when it relates to items charged or credited directly to equity, in which case the deferred tax is also dealt with in equity. Deferred tax assets and liabilities are offset when the company has a legally enforceable right to offset current tax assets and liabilities and the deferred tax assets and liabilities relate to taxes levied by the same tax authority.
1.12
Provisions
Provisions are recognised when the company has a legal or constructive present obligation as a result of a past event, it is probable that the company will be required to settle that obligation and a reliable estimate can be made of the amount of the obligation.
The amount recognised as a provision is the best estimate of the consideration required to settle the present obligation at the reporting end date, taking into account the risks and uncertainties surrounding the obligation. Where the effect of the time value of money is material, the amount expected to be required to settle the obligation is recognised at present value. When a provision is measured at present value, the unwinding of the discount is recognised as a finance cost in profit or loss in the period in which it arises.
1.13
Employee benefits
The costs of short-term employee benefits are recognised as a liability and an expense, unless those costs are required to be recognised as part of the cost of stock or fixed assets.
The cost of any unused holiday entitlement is recognised in the period in which the employee’s services are received.
Termination benefits are recognised immediately as an expense when the company is demonstrably committed to terminate the employment of an employee or to provide termination benefits.
1.14
Retirement benefits
Payments to defined contribution retirement benefit schemes are charged as an expense as they fall due.
1.15
Leases
Rentals payable under operating leases, including any lease incentives received, are charged to profit or loss on a straight line basis over the term of the relevant lease except where another more systematic basis is more representative of the time pattern in which economic benefits from the leases asset are consumed.
1.16
Government grants
Government grants are recognised at the fair value of the asset received or receivable when there is reasonable assurance that the grant conditions will be met and the grants will be received.
A grant that specifies performance conditions is recognised in income when the performance conditions are met. Where a grant does not specify performance conditions it is recognised in income when the proceeds are received or receivable. A grant received before the recognition criteria are satisfied is recognised as a liability.
LEON RESTAURANTS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE 52 WEEK PERIOD ENDED 25 DECEMBER 2022
1
Accounting policies
(Continued)
- 21 -
1.17
Foreign exchange
Transactions in currencies other than pounds sterling are recorded at the rates of exchange prevailing at the dates of the transactions. At each reporting end date, monetary assets and liabilities that are denominated in foreign currencies are retranslated at the rates prevailing on the reporting end date. Gains and losses arising on translation in the period are included in profit or loss.
2
Judgements and key sources of estimation uncertainty
In the application of the company’s accounting policies, the directors are required to make judgements, estimates and assumptions about the carrying amount of assets and liabilities that are not readily apparent from other sources. The estimates and associated assumptions are based on historical experience and other factors that are considered to be relevant. Actual results may differ from these estimates.
The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised where the revision affects only that period, or in the period of the revision and future periods where the revision affects both current and future periods.
Critical judgements
The following judgements (apart from those involving estimates) have had the most significant effect on amounts recognised in the financial statements.
Impairment
The company considers whether its intangible and tangible assets are impaired. Where an indication of impairment is identified, the determination of recoverable value requires estimation of future cash flows based on appropriate assumptions. Each restaurant is considered a cash generative unit. The key accounting estimates are the forecast revenue and margin for each restaurant.
3
Turnover and other revenue
2022
2021
£
£
Turnover analysed by class of business
Restaurant revenue
50,440,944
36,639,304
Franchise income
1,663,353
852,887
Other royalties
75,133
23,185
52,179,430
37,515,376
2022
2021
£
£
Turnover analysed by geographical market
United Kingdom
52,179,430
37,515,376
LEON RESTAURANTS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE 52 WEEK PERIOD ENDED 25 DECEMBER 2022
3
Turnover and other revenue
(Continued)
- 22 -
2022
2021
£
£
Other revenue
Interest income
-
10,744
Grants received
1,145,304
Government grants in the previous year related to amounts received under the UK Government Job Retention Scheme.
4
Exceptional item
2022
2021
£
£
Expenditure
Exceptional administrative item
2,971,832
5,078,173
For the period ended 25 December 2022, the exceptional administrative expenses principally comprise store closure costs (£467,000), onerous lease costs (£1,500,000) and impairment costs (£1,000,000).
For the period ended 26 December 2021, the exceptional administrative expenses incurred principally comprise make whole interest arising from acquisition related bonuses and fees (£2,030,000), impairment of fixed assets (£2,149,000), USA exit fees (£539,000), and re-organisation costs (£335,000).
5
Operating loss
2022
2021
Operating loss for the period is stated after charging/(crediting):
£
£
Exchange (gains)/losses
7,443
Research and development costs
225,812
172,230
Government grants
(1,145,304)
Depreciation of owned tangible fixed assets
3,468,112
2,945,770
Impairment of owned tangible fixed assets
1,010,486
2,149,609
Loss on disposal of tangible fixed assets
229,975
Amortisation of intangible assets
23,212
30,974
Operating lease charges
6,525,200
4,721,596
6
Auditor's remuneration
2022
2021
Fees payable to the company's auditor and associates:
£
£
For audit services
Audit of the financial statements of the company
36,000
350,000
LEON RESTAURANTS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE 52 WEEK PERIOD ENDED 25 DECEMBER 2022
- 23 -
7
Employees
The average monthly number of persons (including directors) employed by the company during the 52 week period was:
2022
2021
Number
Number
Support office
53
51
Restaurant team
1,120
664
Total
1,173
715
Their aggregate remuneration comprised:
2022
2021
£
£
Wages and salaries
17,171,196
14,003,677
Social security costs
974,476
1,460,295
Pension costs
221,468
201,321
18,367,140
15,665,293
8
Directors' remuneration
2022
2021
£
£
Remuneration for qualifying services
963,623
Company pension contributions to defined contribution schemes
7,447
971,070
Since the change of company ownership in 2021, the current directors are being paid by a fellow group company.
Remuneration disclosed above include the following amounts paid to the highest paid director:
2022
2021
£
£
Remuneration for qualifying services
n/a
481,721
Company pension contributions to defined contribution schemes
n/a
937
LEON RESTAURANTS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE 52 WEEK PERIOD ENDED 25 DECEMBER 2022
- 24 -
9
Interest receivable and similar income
2022
2021
£
£
Interest income
Interest on bank deposits
18
Other interest income
10,726
Total income
10,744
10
Interest payable and similar expenses
2022
2021
£
£
Interest on bank overdrafts and loans
284,231
Interest payable to group undertakings
625,106
Make whole interest - early repayment of loans
1,296,386
Amortisation of loan fees
152,447
Other interest
18
625,106
1,733,082
11
Taxation
2022
2021
£
£
Deferred tax
Origination and reversal of timing differences
1,639,581
45,919
Changes in tax rates
14,500
Total deferred tax
1,639,581
60,419
The actual charge for the 52 week period can be reconciled to the expected credit for the 52 week period based on the profit or loss and the standard rate of tax as follows:
2022
2021
£
£
Loss before taxation
(13,268,097)
(9,177,342)
Expected tax credit based on the standard rate of corporation tax in the UK of 19.00% (2021: 19.00%)
(2,520,938)
(1,743,695)
Tax effect of expenses that are not deductible in determining taxable profit
195,423
760,861
Group relief
3,239,071
708,054
Fixed asset differences
(90,323)
Movement in deferred tax not recognised
556,380
320,699
Remeasurement of deferred tax for changes in tax rates
259,968
14,500
Taxation charge for the period
1,639,581
60,419
LEON RESTAURANTS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE 52 WEEK PERIOD ENDED 25 DECEMBER 2022
11
Taxation
(Continued)
- 25 -
From 1 April 2023 the UK corporation tax rate increased to 25%. At the balance sheet date, the proposal to increase the rate to 25% had been substantively enacted and deferred tax at that date has been measured at 25%.
UK unrecognised tax losses and capital allowances (gross) as at 31 December 2022 were £7,149,599 (2021: £7,148,307).
12
Intangible fixed assets
Trademarks
£
Cost
At 27 December 2021 and 25 December 2022
158,966
Amortisation
At 27 December 2021
120,849
Amortisation charged for the 52 week period
23,212
At 25 December 2022
144,061
Carrying amount
At 25 December 2022
14,905
At 26 December 2021
38,117
LEON RESTAURANTS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE 52 WEEK PERIOD ENDED 25 DECEMBER 2022
- 26 -
13
Tangible fixed assets
Leasehold land and buildings
Restaurant and office equipment
Total
£
£
£
Cost
At 27 December 2021
20,046,190
17,546,870
37,593,060
Additions
9,734,533
3,762,500
13,497,033
Disposals
(1,249,331)
(503,391)
(1,752,722)
At 25 December 2022
28,531,392
20,805,979
49,337,371
Depreciation and impairment
At 27 December 2021
12,720,231
12,876,321
25,596,552
Depreciation charged in the 52 week period
1,548,663
1,919,449
3,468,112
Impairment losses
1,010,486
1,010,486
Eliminated in respect of disposals
(1,196,319)
(326,428)
(1,522,747)
At 25 December 2022
14,083,061
14,469,342
28,552,403
Carrying amount
At 25 December 2022
14,448,331
6,336,637
20,784,968
At 26 December 2021
7,325,959
4,670,549
11,996,508
More information on impairment movements in the 52 week period is given in note .
For the period ended 2021, assets under construction within fixed asset additions totalled £2,149,603 (2021: £700,636). The assets under construction, represented fit out and lease premiums of unopened sites. No depreciation charge is made until assets are completed and brought in to use.
At year end, the company assessed the carrying value of the company’s tangible assets and recorded an impairment charge of £1,010,486 (2021: £2,149,609). The recoverable amount of tangible assets was assessed with each individual restaurant assessed as a cash generating unit with cash flows assessed over the remaining lease term of each site not exceeding ten years. A pre-tax discount rate of 9.25% has been used.
14
Fixed asset investments
2022
2021
Notes
£
£
Investments in subsidiaries
15
1,300,200
1,300,200
15
Subsidiaries
Details of the company's subsidiaries at 25 December 2022 are as follows:
LEON RESTAURANTS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE 52 WEEK PERIOD ENDED 25 DECEMBER 2022
15
Subsidiaries
(Continued)
- 27 -
Name of undertaking
Registered office
Nature of business
Class of
% Held
shares held
Direct
Leon Naturally Fast Food Limited
See below
Holder of consumer bond
Ordinary shares
100.00
FeedBritain Limited
See below
Dormant company
Ordinary shares
100.00
Leon Grocery Limited
See below
Food & Beverage products
Ordinary shares
100.00
The registered office of the three subsidiaries is Waterside Head Office, Haslingden Road, Blackburn, BB1 2FA.
16
Stocks
2022
2021
£
£
Raw materials and consumables
472,628
297,073
There is no significant difference between the replacement cost of the stock and its carrying value.
17
Debtors
2022
2021
Amounts falling due within one year:
£
£
Trade debtors
581,880
448,801
Amounts owed by group undertakings
66,159
Other debtors
93,770
328,101
Prepayments and accrued income
2,343,425
599,506
3,019,075
1,442,567
2022
2021
Amounts falling due after more than one year:
£
£
Other debtors
1,861,216
1,232,539
Deferred tax asset (note 21)
1,639,581
1,861,216
2,872,120
Total debtors
4,880,291
4,314,687
Amounts owed by group undertakings are unsecured, interest free, have no fixed date of repayment and are repayable on demand.
Other debtors includes rental deposits of £1,861,216 (2021: £1,232,539) which are receivable in more than one year.
LEON RESTAURANTS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE 52 WEEK PERIOD ENDED 25 DECEMBER 2022
- 28 -
18
Creditors: amounts falling due within one year
2022
2021
£
£
Trade creditors
5,683,989
4,345,000
Amounts owed to group undertakings
196,929
85,545
Taxation and social security
941,411
1,435,870
Other creditors
1,714,427
834,967
Accruals and deferred income
7,481,658
5,764,125
16,018,414
12,465,507
Amounts due to group undertakings are unsecured, interest free, have no fixed date of repayment and are repayable on demand.
19
Creditors: amounts falling due after more than one year
2022
2021
£
£
Amounts owed to group undertakings
22,854,526
3,549,278
Amounts owed to group company comprises a long term borrowing facility repayable in 2026. Interest payable is variable at LIBOR + 3.5%. There are no financial covenants.
20
Provisions for liabilities
2022
2021
£
£
Onerous lease
1,496,795
-
Movements on provisions:
Onerous lease
£
Utilisation of provision
1,496,795
The provision arises from obligations under property leases, principally relating to onerous rental terms on two properties no longer in use.
LEON RESTAURANTS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE 52 WEEK PERIOD ENDED 25 DECEMBER 2022
- 29 -
21
Deferred taxation
The following are the major deferred tax liabilities and assets recognised by the company and movements thereon:
Assets
Assets
2022
2021
Balances:
£
£
Accelerated capital allowances
-
489,581
Tax losses
-
1,150,000
-
1,639,581
2022
Movements in the 52 week period:
£
Asset at 27 December 2021
(1,639,581)
Charge to profit or loss
1,639,581
Liability at 25 December 2022
-
22
Retirement benefit schemes
2022
2021
Defined contribution schemes
£
£
Charge to profit or loss in respect of defined contribution schemes
221,468
201,321
The company operates a defined contribution pension scheme for all qualifying employees. The assets of the scheme are held separately from those of the company in an independently administered fund.
The amount owed in relation to pension contributions as at 25 December 2022 was £63,232 (2021:£38,405).
23
Share capital
2022
2021
2022
2021
Ordinary share capital
Number
Number
£
£
Issued and fully paid
Ordinary class A of £1 each
341,362
341,362
341,362
341,362
Option class A of £1 each
5,804
5,804
5,804
5,804
Ordinary class B of £1 each
4,727
4,727
4,727
4,727
Ordinary class E of £1 each
138
138
138
138
Ordinary class L1 of £1 each
6,851
6,851
6,851
6,851
Ordinary class L2 of £1 each
10,277
10,277
10,277
10,277
Ordinary class L3 of 3p each
17,129
17,129
514
514
Deferred shares of £1 each
5,200
5,200
5,200
5,200
391,488
391,488
374,873
374,873
LEON RESTAURANTS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE 52 WEEK PERIOD ENDED 25 DECEMBER 2022
23
Share capital
(Continued)
- 30 -
The Ordinary shares carry full equity and dividend participation, with voting rights. The Option shares carry no voting rights, otherwise ranking pari passu with the Ordinary shares.
The Ordinary B shares carry equity and dividend participation above a threshold of £25 million equity value. |
The L1 shares carry equity and dividend participation above a threshold of £53.7 million equity value. | |
The deferred shares have no equity participation. | | |
The Ordinary E shares carry equity and dividend participation above a threshold of £53.65 million equity value. |
24
Share premium account
2022
2021
£
£
At the beginning and end of the 52 week period
27,182,810
27,182,810
25
Other Reserve
2022
2021
£
£
At the beginning of the 52 week period
16,082,274
-
Additions
-
16,082,274
At the end of the 52 week period
16,082,274
16,082,274
The other reserve relates to a capital contribution which arose on the 9th May 2021 following the acquisition of Leon Restaurants by its immediate parent EG Foodservices Limited.
26
Profit and loss reserves
2022
2021
£
£
At the beginning of the 52 week period
(38,145,810)
(28,908,049)
Loss for the 52 week period
(14,907,678)
(9,237,761)
At the end of the 52 week period
(53,053,488)
(38,145,810)
The profit and loss reserves include all current and prior period retained profits.
LEON RESTAURANTS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE 52 WEEK PERIOD ENDED 25 DECEMBER 2022
- 31 -
27
Operating lease commitments
Lessee
At the reporting end date the company had outstanding commitments for future minimum lease payments under non-cancellable operating leases, which fall due as follows:
2022
2021
£
£
Within one year
8,501,264
3,977,164
Between two and five years
34,424,012
25,882,156
In over five years
19,878,407
24,179,359
62,803,683
54,038,679
28
Related party transactions
The company is exempt under FRS 102 from disclosing related party transactions with wholly owned entities that are part of the EG Group Holdings Limited.
29
Ultimate controlling party
In the opinion of the Directors, the company's ultimate parent company and ultimate controlling party is Optima Bidco (Jersey) Limited, a company incorporated and registered in Jersey Channel Islands. The company's immediate parent undertaking and controlling party is EG Foodservice Limited.
The parent undertaking of the largest group is, which includes the company and for which group accounts are prepared, is EG Group Holdings Limited, a company incorporated in Great Britain, registered at Waterside Head Office, Haslingden Road, Guide, Blackburn, BB1 2FA, United Kingdom.
The parent undertaking of the smallest group is EG Group Limited, a company incorporated in Great Britain, registered at Waterside Head Office, Haslingden Road, Guide, Blackburn, BB1 2FA, United Kingdom.
Copies of the group financial statements of EG Group Holdings Limited and EG Group Limited are available from Companies House, Crown Way, Maundy, Cardiff, CF14 3UZ.
30
Subsequent Events
On 30 May the EG Group Limited announced that it had agreed to sell the majority of its UK and Ireland fuel, foodservice, grocery and merchandise business, including Leon Restaurants Limited to Asda Group for a headline consideration of £2.27bn ($2.8bn). Subject to customary closing conditions and relevant consents being received, the transaction is expected to complete in Q4 2023.
The transaction will allow Asda to explore opportunities to further expand the Leon brand.
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