ACCOUNTS - Final Accounts preparation
ACCOUNTS - Final Accounts preparation
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Registered number:
For the year ended
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Mowgli Street Food Group Limited
Company Information
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Mowgli Street Food Group Limited
Contents
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Mowgli Street Food Group Limited
Group strategic report
For the year ended 31 July 2022
The directors present the strategic report for the year ended 31st July 2022.
The Group enjoyed a strong year following 2 years heavily impacted by Covid-19 and associated trading restrictions. A full year of trade saw turnover increase by 214% to £26.9m (2021: £8.6m) driven by 4 new openings in the financial year and strong underlying sales growth from the existing estate, following the lifting of all COVID-19 restrictions. The group operated 15 restaurants across the country at year end with leases secured or in negotiation for further openings in the coming years.
Adjusted EBITDA, which excludes exceptional and one-off costs related to the opening of new restaurants was £3.3m (2021: £0.6m). Net debt (borrowings less cash at bank and in hand) stood at £4.8m, an increase of £1.6m on prior year due to reduced cash at year end due to working capital requirements, and £0.1m increase in bank loans. Net assets were £5.7m at year end (2021: £5.1m). This is a result of £2.3m increase to fixed assets across the estate mainly due to four new openings which was offset by a reduction in cash of £1.5m due to working capital requirements at year end.
Covid-19
The risks of Covid-19 continue to be monitored. The company has modelled multiple scenarios for the next 24 months and is confident in its ability to maintain sufficient cash to meet its liabilities throughout. Economic and market risks Whilst considerable uncertainty remains around the broader economic outlook for the UK, the Group believes that through delivery of an excellent and consistent offer, a compelling value proposition and effective management control it can withstand market pressures. Energy Costs Higher energy costs in the UK market has led to an increase in overheads across the Group. A fixed contract has been secured to avoid large fluctuations in cost month by month. Further, measures have been put in place to reduce our energy consumption where possible in our commitment to sustainability. Brexit The Group has felt no material direct adverse impact due to Brexit to date, however, it continues to work closely with its supply chain partners to mitigate future risks both from a cost and availability point of view. Health & Safety The Group places the upmost importance of the safety of the food served in restaurants and the general health and safety of both employees and customers, a priority further highlighted by the current risks due to the pandemic. The Group has worked closely with local authorities and health and safety experts to ensure the best processes and standards are always in place across the Group. Regular external audits are conducted to ensure standards are always met. Liquidity risk The Group monitors cash flow as part of its daily control procedures to ensure appropriate liquidity is available. Cashflows are stress tested to ensure the ability of Group to withstand future shocks.
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Mowgli Street Food Group Limited
Group strategic report (continued)
For the year ended 31 July 2022
The financial performance of the Group is measured using several key performance indicators (KPIs), including turnover, adjusted EBITDA and adjusted EBITDA margin.
Management continues to monitor both financial and non-financial KPIs on an on-going basis. Non-financial KPIs include food safety standards, staff turnover and engagement, customer feedback, natural resource consumption, consistency of operational standards and engagement with charitable partners.
This report was approved by the board and signed on its behalf.
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Mowgli Street Food Group Limited
Directors' report
For the year ended 31 July 2022
The directors present their report and the financial statements for the year ended 31 July 2022.
The directors are responsible for preparing the Group strategic report, the Directors' report and the consolidated financial statements in accordance with applicable law and regulations.
Company law requires the directors to prepare financial statements for each financial year. Under that law the directors have elected to prepare the financial statements in accordance with applicable law and United Kingdom Accounting Standards (United Kingdom Generally Accepted Accounting Practice), including Financial Reporting Standard 102 ‘The Financial Reporting Standard applicable in the UK and Republic of Ireland'. Under company law the directors must not approve the financial statements unless they are satisfied that they give a true and fair view of the state of affairs of the Company and the Group and of the profit or loss of the Group for that period.
In preparing these financial statements, the directors are required to:
∙select suitable accounting policies for the Group's financial statements and then apply them consistently;
∙make judgements and accounting estimates that are reasonable and prudent;
∙prepare the financial statements on the going concern basis unless it is inappropriate to presume that the Group will continue in business.
The directors are responsible for keeping adequate accounting records that are sufficient to show and explain the Company's transactions and disclose with reasonable accuracy at any time the financial position of the Company and the Group and to enable them to ensure that the financial statements comply with the Companies Act 2006. They are also responsible for safeguarding the assets of the Company and the Group and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.
The profit for the year, after taxation, amounted to £521,180 (2021 - loss £2,767,942).
The directors do not recommend the payment of a final dividend.
The directors who served during the year were:
The group remains committed to its purpose of enriching lives in the cities in which it trades, starting with the lives of its teams. The Group aims to create nourished, purposeful and fulfilled teams and was proud to be placed 16th in the 2022 100 Best Large Companies to work for and third best Hospitality business to work for. Charitable work is also a central pillar and to date £1.1m has been raised for partner local and international charities through customer donations and company events.
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Mowgli Street Food Group Limited
Directors' report (continued)
For the year ended 31 July 2022
The Group's policy is to consult its teams on all matters likely to affect employees' interests.
Information about matters of concern to employees is given through information bulletins and reports which seek to achieve a common awareness on the part of all employees of the financial and economic factors affecting the group's performance. There is no employee share scheme at present, but the directors are considering the introduction of such a scheme as a means of further encouraging the involvement of employees in the company's performance.
Following the year end, the Group received private equity investment from TriSpan RS, who became majority shareholder. As a result of the investment, loan notes due to Foresight VCT plc and bank loan with NatWest was repaid and Preference shares were converted to Ordinary shares.
The auditors, Hurst Accountants Limited, and will be proposed for reappointment in accordance with section 485 of the Companies Act 2006.
This report was approved by the board and signed on its behalf.
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Mowgli Street Food Group Limited
Independent auditors' report to the members of Mowgli Street Food Group Limited
We have audited the financial statements of Mowgli Street Food Group Limited (the 'parent Company') and its subsidiaries (the 'Group') for the year ended 31 July 2022, which comprise the Group Statement of comprehensive income, the Group and Company Balance sheets, the Group Statement of cash flows, the Group and Company Statement of changes in equity and the related notes, including a summary of significant accounting policies. The financial reporting framework that has been applied in their preparation is applicable law and United Kingdom Accounting Standards, including Financial Reporting Standard 102 ‘The Financial Reporting Standard applicable in the UK and Republic of Ireland' (United Kingdom Generally Accepted Accounting Practice).
We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and applicable law. Our responsibilities under those standards are further described in the Auditors' responsibilities for the audit of the financial statements section of our report. We are independent of the Group in accordance with the ethical requirements that are relevant to our audit of the financial statements in the United Kingdom, including the Financial Reporting Council's Ethical Standard and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
In auditing the financial statements, we have concluded that the directors' use of the going concern basis of accounting in the preparation of the financial statements is appropriate.
Based on the work we have performed, we have not identified any material uncertainties relating to events or conditions that, individually or collectively, may cast significant doubt on the Group's or the parent 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 Auditors' report thereon. The directors are responsible for the other information contained within the Annual Report. Our opinion on the financial statements does not cover the other information and, except to the extent otherwise explicitly stated in our report, we do not express any form of assurance conclusion thereon. Our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the course of the audit, or otherwise appears to be materially misstated. If we identify such material inconsistencies or apparent material misstatements, we are required to determine whether this gives rise to a material misstatement in the financial statements themselves. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact.
We have nothing to report in this regard.
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Mowgli Street Food Group Limited
Independent auditors' report to the members of Mowgli Street Food Group Limited (continued)
In our opinion, based on the work undertaken in the course of the audit:
∙the information given in the Group strategic report and the Directors' report for the financial year for which the financial statements are prepared is consistent with the financial statements; and
∙the Group strategic report and the Directors' report have been prepared in accordance with applicable legal requirements.
In the light of the knowledge and understanding of the Group and the parent Company and its environment obtained in the course of the audit, we have not identified material misstatements in the Group strategic report or the Directors' report.
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an Auditors' report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with ISAs (UK) will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these Group financial statements.
Irregularities, including fraud, are instances of non-compliance with laws and regulations. We design procedures in line with our responsibilities, outlined above, to detect material misstatements in respect of irregularities, including fraud. The extent to which our procedures are capable of detecting irregularities, including fraud is detailed below:
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Mowgli Street Food Group Limited
Independent auditors' report to the members of Mowgli Street Food Group Limited (continued)
Identifying and assessing potential risks related to irregularities
In identifying and assessing the risks of material misstatement in respect of irregularities, including fraud and non-compliance with laws and regulations, we considered the following:
∙The nature of the industry and sector in which the company operates; the control environment and business performance including key drivers for directors' remuneration, bonus levels and performance targets.
∙The outcome of enquiries of local management and parent company management, including whether management was aware of any instances of non-compliance with laws and regulations, and whether management had knowledge of any actual, suspected, or alleged fraud.
∙Supporting documentation relating to the Company's policies and procedures for:
°Identifying, evaluating, and complying with laws and regulations
°Detecting and responding to the risks of fraud
∙The internal controls established to mitigate risks related to fraud or non-compliance with laws and regulations.
∙The outcome of discussions amongst the engagement team regarding how and where fraud might occur in the financial statements and any potential indicators of fraud.
∙The legal and regulatory framework in which the Company operates, particularly those laws and regulations which have a direct effect on the financial statements, such as the Companies Act 2006, pensions and tax legislation, or which had a fundamental effect on the operations of the Company, including General Data Protection requirements, Coronavirus Job Retention Scheme, the Food Hygiene Regulations 2006, and Anti-bribery and Corruption.
Audit response to risks identified
Our procedures to respond to the risks identified included the following:
∙Reviewing the financial statements disclosures and testing to supporting documentation to assess compliance with the provisions of those relevant laws and regulations which have a direct effect on the financial statements.
∙Discussions with management, including consideration of known or suspected instances of non-compliance with laws and regulations and fraud.
∙Evaluation and testing of the operating effectiveness of management’s controls designed to prevent and detect irregularities.
∙Enquiring of management about any actual and potential litigation and claims.
∙Performing analytical procedures to identify any unusual or unexpected relationships which may indicate risks of material misstatement due to fraud.
We have also considered the risk of fraud through management override of controls by:
∙Testing the appropriateness of journal entries and other adjustments. We have used data analytics software to identify accounting transactions which may pose a heightened risk of material misstatement, whether due to fraud or error.
∙Challenging assumptions made by management in their significant accounting estimates, and 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.
We also communicated relevant identified laws and regulations and potential fraud risks to all engagement team members and remained alert to any indications of fraud or non-compliance with laws and regulations throughout the audit.
There are inherent limitations in the audit procedures described above, and the further removed non-compliance with laws and regulations are from the events and transactions reflected in the financial statements, the less likely we would become aware of them. Also, the risk of not detecting a material misstatement due to fraud is higher than the risk of not detecting one resulting from error, as fraud may involve deliberate concealment by, for example, forgery or intentional misrepresentations, or through collusion.
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Mowgli Street Food Group Limited
Independent auditors' report to the members of Mowgli Street Food Group Limited (continued)
A further description of our responsibilities for the audit of the financial statements is located on the Financial Reporting Council's website at: www.frc.org.uk/auditorsresponsibilities. This description forms part of our Auditors' report.
This report is made solely to the Company's members, as a body, in accordance with Chapter 3 of Part 16 of the Companies Act 2006. Our audit work has been undertaken so that we might state to the Company's members those matters we are required to state to them in an Auditors' report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the Company and the Company's members, as a body, for our audit work, for this report, or for the opinions we have formed.
for and on behalf of
Chartered Accountants & Statutory Auditors
Lancashire Gate
21 Tiviot Dale
SK1 1TD
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Mowgli Street Food Group Limited
Consolidated statement of comprehensive income
For the year ended 31 July 2022
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Mowgli Street Food Group Limited
Registered number: 10604533
Consolidated balance sheet
As at
The financial statements were approved and authorised for issue by the board and were signed on its behalf by:
The notes on pages 17 to 36 form part of these financial statements.
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Mowgli Street Food Group Limited
Registered number: 10604533
Company balance sheet
As at
The Company has taken advantage of the exemption allowed under section 408 of the Companies Act 2006 and has not presented its own Statement of comprehensive income in these financial statements.
The financial statements were approved and authorised for issue by the board and were signed on its behalf by:
The notes on pages 17 to 36 form part of these financial statements.
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Mowgli Street Food Group Limited
Consolidated statement of changes in equity
For the year ended 31 July 2022
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Mowgli Street Food Group Limited
Company statement of changes in equity
For the year ended 31 July 2022
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Mowgli Street Food Group Limited
Consolidated statement of cash flows
For the year ended 31 July 2022
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Mowgli Street Food Group Limited
Consolidated statement of cash flows (continued)
For the year ended 31 July 2022
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Mowgli Street Food Group Limited
Consolidated analysis of net debt
For the year ended 31 July 2022
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Mowgli Street Food Group Limited
Notes to the financial statements
For the year ended 31 July 2022
Mowgli Street Food Group Limited is a private company limited by shares incorporated in Engalnd and Wales. The address of the registered office is 18 Queen Avenue, Castle Street, Liverpool, L2 4TX, company number 10604533.
The nature of the Company's operation and principal activity is that of a holding Company. The principal activity of the Group is the operation of Indian street food restaurants. The Consolidated Financial Statements of the Company as at and for the year ended 31st July 2022 and the comparative year ended 31st July 2021 comprise the Company and its subsidiaries (together referred to as the "Group").
2.Accounting policies
The financial statements have been prepared under the historical cost convention unless otherwise specified within these accounting policies and in accordance with Financial Reporting Standard 102, the Financial Reporting Standard applicable in the UK and the Republic of Ireland and the Companies Act 2006.
The preparation of financial statements in compliance with FRS 102 requires the use of certain critical accounting estimates. It also requires Group management to exercise judgement in applying the Group's accounting policies (see note 3).
The Company has taken advantage of the exemption allowed under section 408 of the Companies Act 2006 and has not presented its own Statement of comprehensive income in these financial statements.
The following principal accounting policies have been applied:
The consolidated financial statements present the results of the Company and its own subsidiaries ("the Group") as if they form a single entity. Intercompany transactions and balances between group companies are therefore eliminated in full.
The consolidated financial statements incorporate the results of business combinations using the purchase method. In the Balance sheet, the acquiree's identifiable assets, liabilities and contingent liabilities are initially recognised at their fair values at the acquisition date. The results of acquired operations are included in the Consolidated statement of comprehensive income from the date on which control is obtained. They are deconsolidated from the date control ceases.
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Mowgli Street Food Group Limited
Notes to the financial statements
For the year ended 31 July 2022
2.Accounting policies (continued)
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Mowgli Street Food Group Limited
Notes to the financial statements
For the year ended 31 July 2022
2.Accounting policies (continued)
The fair value of the award also takes into account non-vesting conditions. These are either factors beyond the control of either party (such as a target based on an index) or factors which are within the control of one or other of the parties (such as the Group keeping the scheme open or the employee maintaining any contributions required by the scheme). Where the terms and conditions of options are modified before they vest, the increase in the fair value of the options, measured immediately before and after the modification, is also charged to profit or loss over the remaining vesting period. Where equity instruments are granted to persons other than employees, profit or loss is charged with fair value of goods and services received.
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Mowgli Street Food Group Limited
Notes to the financial statements
For the year ended 31 July 2022
2.Accounting policies (continued)
Goodwill
Other intangible assets
All intangible assets are considered to have a finite useful life. If a reliable estimate of the useful life cannot be made, the useful life shall not exceed ten years.
The estimated useful lives range as follows:
Depreciation is charged so as to allocate the cost of assets less their residual value over their estimated useful lives, using the straight-line method.
Depreciation is provided on the following basis:
The assets' residual values, useful lives and depreciation methods are reviewed, and adjusted prospectively if appropriate, or if there is an indication of a significant change since the last reporting date.
Gains and losses on disposals are determined by comparing the proceeds with the carrying amount and are recognised in profit or loss.
At 1st June 2021, management reviewed the useful lives of tangible fixed assets and determined the depreciation for plant and machinery should be changed to 5-10 years straight line, leasehold improvements to straight line over the life of the lease, fixture and fittings to 5-10 years straight line, and computers to 3 years straight line, all of which were previously depreciated at 25% reducing balance.
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Mowgli Street Food Group Limited
Notes to the financial statements
For the year ended 31 July 2022
2.Accounting policies (continued)
At each balance sheet date, stocks are assessed for impairment. If stock is impaired, the carrying amount is reduced to its selling price less costs to complete and sell. The impairment loss is recognised immediately in profit or loss. In the Consolidated statement of cash flows, cash and cash equivalents are shown net of bank overdrafts that are repayable on demand and form an integral part of the Group's cash management. Provisions are charged as an expense to profit or loss in the year that the Group becomes aware of the obligation, and are measured at the best estimate at the balance sheet date of the expenditure required to settle the obligation, taking into account relevant risks and uncertainties. When payments are eventually made, they are charged to the provision carried in the Balance sheet.
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Mowgli Street Food Group Limited
Notes to the financial statements
For the year ended 31 July 2022
2.Accounting policies (continued)
The Group only enters into basic financial instrument transactions that result in the recognition of financial assets and liabilities like trade and other debtors and creditors, loans from banks and other third parties, loans to related parties and investments in ordinary shares.
Debt instruments (other than those wholly repayable or receivable within one year), including loans and other accounts receivable and payable, are initially measured at present value of the future cash flows and subsequently at amortised cost using the effective interest method. Debt instruments that are payable or receivable within one year, typically trade debtors and creditors, are measured, initially and subsequently, at the undiscounted amount of the cash or other consideration expected to be paid or received. The directors believe that judgements, estimates and assumptions do not have a significant risk of causing a material difference to the carrying amounts of the assets and liabilities within the next financial year.
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Mowgli Street Food Group Limited
Notes to the financial statements
For the year ended 31 July 2022
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Mowgli Street Food Group Limited
Notes to the financial statements
For the year ended 31 July 2022
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Mowgli Street Food Group Limited
Notes to the financial statements
For the year ended 31 July 2022
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Mowgli Street Food Group Limited
Notes to the financial statements
For the year ended 31 July 2022
11.Taxation (continued)
The main rate of corporation tax is due to increase to 25% in the tax year commencing 1st April 2023 for companies where profits exceed £250,000. A tapered rate will be introduced for profits above £50,000 up to the £250,000 limit.
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Mowgli Street Food Group Limited
Notes to the financial statements
For the year ended 31 July 2022
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Mowgli Street Food Group Limited
Notes to the financial statements
For the year ended 31 July 2022
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Mowgli Street Food Group Limited
Notes to the financial statements
For the year ended 31 July 2022
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Mowgli Street Food Group Limited
Notes to the financial statements
For the year ended 31 July 2022
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Mowgli Street Food Group Limited
Notes to the financial statements
For the year ended 31 July 2022
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Mowgli Street Food Group Limited
Notes to the financial statements
For the year ended 31 July 2022
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Mowgli Street Food Group Limited
Notes to the financial statements
For the year ended 31 July 2022
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Mowgli Street Food Group Limited
Notes to the financial statements
For the year ended 31 July 2022
Share premium account
Share-based payment reserve
Profit and loss account
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Mowgli Street Food Group Limited
Notes to the financial statements
For the year ended 31 July 2022
In 2018, the Company set up a share option scheme for certain employees (including directors), under rights to acquire ordinary shares in the capital of the Company can be granted. Previously, the share option scheme had been treated as cash-settled scheme rather than an equity-settled scheme. An adjustment was made in the prior year to release the liability of £682,721 to a share based payment reserve.
Furthermore, the share based payment reserve was calcuated by revaluing the business each year, which is not the treatment for equity-settled schemes. An adjustment has been made in the current year to value the share based payment reserve based on the original business valuation at the date the options were granted.
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Mowgli Street Food Group Limited
Notes to the financial statements
For the year ended 31 July 2022
The company operates a defined contributions pension scheme. The assets of the scheme are held separately from those of the company in an adequately administered fund. The pension cost charge represents contributions payable by the company to the fund and amounted to £228,851 (2021: £101,606). Contributions totalling £47,621 (2021: £16,358) were payable to the fund at the balance sheet date and are included in creditors.
The Group is under the control of TriSpan RS who is the majority shareholder.
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