Registered number:
FOR THE YEAR ENDED 31 MARCH 2023
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MFT CAPITAL LTD
COMPANY INFORMATION
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MFT CAPITAL LTD
CONTENTS
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MFT CAPITAL LTD
GROUP STRATEGIC REPORT
FOR THE YEAR ENDED 31 MARCH 2023
The directors of MFT Capital Ltd present their strategic report for the year ended 31 March 2023. MFT Capital Ltd is the proud owner and operator of popular hospitality and leisure brands, including Flip Out Adventure Parks, which is the UKs leading trampoline and adventure park brand and operates in nine countries across the world, and Putt Putt Noodle Adventure Golf, which offers an immersive mini golf experience inspired by the far east. Our business model combines both owner-operated and franchised businesses, offering a diverse range of entertainment options to our valued customers. As we reflect on the past year, we are pleased to present this strategic report that provides an overview of our business performance and outlines our future development plans.
The year under review was marked by several challenges, particularly the substantial increase in operating costs. Despite these challenges, we made the conscious decision to maintain our pre-COVID pricing structure until the end of the year, at which point we implemented an 8% price increase. This measured approach allowed us to balance the need for sustainable profitability while minimising any financial burden on our loyal customer base.
Comparisons to prior years are difficult due to the extended impact of Covid related restrictions between March 2020 and January 2022. However, for the last 6 months of the financial year when compared to 2019 (that being the last comparable period of no interruption) we saw encouraging like-for-like growth, which against the backdrop of external pressures, we believe to be a good trading performance. We are not immune to the inflationary pressures on the leisure and retail industry in general and we took steps to mitigate this impact without compromising the offer to our guests. During the year we opened new a new Flip Out in Hounslow, transferred Flip Out Aylesbury, Chatham and London E6 out of the managed group and disposed of Flip Out Bristol. The Group also acquired an existing Putt Putt franchisee site in Norwich. At the end of the financial year the Group was constructing 2 joint Flip Out and Putt Putt Noodle sites in Telford and Poole respectively which commenced operations shortly after the end of this financial period. Group turnover for the year was £16m (2022 - £15.8m) with a gross profit margin of 65% (2022 - 55%). The improvement being a combination of various operational initiatives to maximise efficiency, as well as favourable movement in the revenue/product mix. The loss for the period was £4.4m (2022 – profit of £22.6m). The 2022 profit figure includes the profit on disposal of the Boom Battle Bar business of £25.9m. Other costs increased as the Group increased overhead in readiness for expansion of the managed and franchise business in the next financial year in particular. Group fixed assets for the year were £14.5m (2022 - £10.7m) driven by new site acquisitions and builds. Net current assets have reduced by £7.8m in the year. This is due to a reduction in the value of contingent share consideration of £2.8m in other debtors in relation to the disposal of the Boom Battle Bar business. Furthermore there was an increase in creditors falling due within one year to £9.8m (2022 – £8.1m) driven by investment in new acquisitions and builds. Creditors falling due after more than one year have increased to £6.4m (2022 - £2.5m) due to additional financing obtained for new builds. Looking ahead while economic uncertainty and inflationary cost pressures are set to persist in the short term, we believe the group is in an excellent position to capitalise on opportunities in the marketplace. We are in a position to open new sites across the different brands with an experienced and motivated leadership team to execute the Groups strategy. The cost pressures of the last 12 months have impacted profitability, and this will continue into 2024. Whilst we would expect costs to remain higher than they were prior to the war in Ukraine we continue to mitigate these effects through our new supplier partnerships and cost engineering strategy. Throughout the year, we have observed that our customer numbers have remained stable, reflecting the resilience of our brand and the enduring appeal of our offerings to the public. However, our continued success is not without its challenges. We are vigilant about the potential impact of rising inflation and the cost of living on customer spending habits. Additionally, the broader economic landscape remains uncertain, necessitating a vigilant and adaptable approach to our operations.
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MFT CAPITAL LTD
GROUP STRATEGIC REPORT (CONTINUED)
FOR THE YEAR ENDED 31 MARCH 2023
In the dynamic landscape of the leisure and hospitality industry, our organisation remains attuned to a spectrum of potential challenges and uncertainties that may impact our operations. By proactively identifying and addressing these risks, we aim to ensure a stable and sustainable journey ahead.
Economic Risk The ever-shifting economic landscape poses one of the most significant and far-reaching risks to our operations. As the global and local economies experience fluctuations, our business may be influenced by factors such as inflation, changes in consumer spending patterns, and broader economic downturns. We acknowledge these uncertainties and remain committed to maintaining a vigilant eye on economic indicators, allowing us to adapt our strategies and operations accordingly. Financial Risk Sound financial management is the bedrock of the Group's success. We recognize that financial risk is an inherent part of any business venture, and we have established stringent risk management protocols to safeguard our financial stability. These risks include currency exchange fluctuations, liquidity constraints, and the need to secure sustainable funding. Our approach to financial risk centres on prudent financial planning, diversification of financial assets, and effective cash flow management. Threat of Competition In an industry characterised by innovation and rapid development, competition is an ever-present reality. The threat of competition, particularly from new entrants or industry disruptors, challenges us to consistently enhance our offerings and remain at the forefront of the leisure and entertainment market. We see competition as a catalyst for innovation, motivating us to continue investing in new attractions, improved customer experiences, and strategic partnerships that set us apart. Business Risks Beyond the generic risks inherent to the broader industry, MFT Capital Ltd faces specific business risks. One notable challenge pertains to managing large-scale property deals for our expanding network of entertainment facilities. This involves intricate negotiations and substantial capital investments. We are prepared to mitigate these risks through careful financial planning, leveraging our reputation as anchor tenants, and rigorous due diligence on property deals. Additionally, the shift towards sustainability and ethical practices has become an influential factor. We recognise the increasing emphasis on environmental responsibility, and we are taking proactive steps towards minimizing our environmental footprint. This includes exploring opportunities to incorporate renewable energy solutions like solar power, which not only align with environmental concerns but also reduce long-term operational costs. As we set our sights on potential public listing or equivalent strategies, our commitment to risk management remains steadfast. We understand that navigating these risks and uncertainties requires agility and the ability to adapt swiftly to changing conditions. We look to the future with a readiness to overcome these challenges, secure in the knowledge that our dedicated team, strong leadership, and the unwavering support of our stakeholders are valuable assets in managing these risks.
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MFT CAPITAL LTD
GROUP STRATEGIC REPORT (CONTINUED)
FOR THE YEAR ENDED 31 MARCH 2023
For a comprehensive assessment of our financial performance, we are pleased to provide the following key indicators:
1. Revenue Growth: Our revenues remained steady, with a modest increase in line with our pricing strategy. Revenue increased circa £0.2m YOY from £15.8m to £16m which represented growth of 1.3%. This was achieved through a combination of new site openings & refurbishment of existing sites. 2. Gross Profit Margin: Despite increased costs, our gross profit margins have remained within acceptable parameters, increasing to 65.0% from 55.0% in 2022 demonstrating prudent financial management. 3. Cost Control: We have implemented rigorous cost-control measures to mitigate the impact of rising expenses however despite this administrative expenses rose from £8.2m to £12.0m as the Group increased overheads in readiness for expansion of the management and franchise business in the next financial year in particular. Inflationary pressures also contributed to this increase in costs.
Operational Enhancements
During the year, our Senior Management Team (SMT) conducted an in-depth analysis of our opening hours and staffing matrix. This comprehensive review was undertaken to ensure that our operations run at maximum efficiency during peak times. As a result, we have optimised our staffing levels and operating hours to better meet the demands of our customers, ensuring an exceptional experience. Key Management and Staff Development We are proud to report that we have retained all key management positions, ensuring continuity and stability within our organisation. Additionally, we have promoted multiple individuals from within our company, fostering a culture of growth and development. Employee Incentive Programs and Automation Prospects Throughout the year, we have introduced staff incentive programs, aimed at recognising and rewarding the hard work and dedication of our employees. Looking ahead, we are exploring the prospect of automation systems to further enhance operational efficiency in the near future. Innovation in Games and Equipment We are actively investing in the development of new games and equipment to enrich the experiences we offer to our customers. This commitment to innovation is integral to our growth strategy. Refinement of Food and Beverage Operations Our Food and Beverage (F&B) operations have undergone refinements to ensure that we continue to provide high-quality offerings that complement our entertainment experiences. Enhanced Customer Satisfaction We are delighted to report an increase in our Customer Satisfaction (CSAT) scores, a testament to our unwavering commitment to delivering exceptional experiences to our patrons. Revenue Growth and Prospects Lastly, it is worth noting that some of our stores saw year-on-year (YOY) revenue growth, a positive sign of the enduring popularity of our offerings and the effectiveness of our strategic initiatives.
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MFT CAPITAL LTD
GROUP STRATEGIC REPORT (CONTINUED)
FOR THE YEAR ENDED 31 MARCH 2023
Equipment and Park Refits
Ongoing research has identified parks that would benefit from additional equipment and park refits. Past performance indicators demonstrate that these investments will have a very positive impact on sales. Accordingly, we will allocate funds to this area, with expectations of positively impacting the 23-24 financial figures. Expansion and Property Deals We are actively sourcing a large number of new property deals throughout the UK, many of which come with attractive incentives. Our reputation as anchor tenants, with an average of 250,000 paying customers per park, has positioned us favourably with landlords. This expansion strategy will further strengthen our market presence and contribute to our continued success.
Section 172(1) of the Companies Act 2006 requires Directors to take into consideration the interests of the stakeholders in their decision making. The Directors continue to have regard to the interests of the Group’s employees and other stakeholders, including the impact of its activities on the community, the environment and the group’s reputation, when making decisions. Acting in good faith and fairly between members, the Directors consider what is most likely to promote the success of the Group in the long term.
The Directors are fully aware of their responsibilities to promote the success of the Group in accordance with section 172 of the Companies Act 2006. To ensure the Group meets this, the Directors regularly reflect on how the Group engages with its stakeholders and opportunities for enhancement with stakeholders themselves. Such stakeholders include shareholders, employees, customers, and suppliers. Environment and Employee Matters At MFT Capital Ltd, we recognise our responsibility to operate sustainably and ethically. We are committed to minimising our environmental footprint through responsible business practices. As part of our sustainability efforts, we are actively looking into solar power solutions for properties that could benefit from it. This initiative aligns with our commitment to reducing carbon emissions and promoting energy efficiency. Our employees are integral to our success, and we prioritise their well-being and development. We have undertaken initiatives to reduce our carbon emissions and promote energy efficiency. In addition, we foster a diverse and inclusive work environment, ensuring equal opportunities for all our employees. Our commitment to employee welfare extends to providing training and development programs, as well as employee engagement activities. Engagement with Stakeholders Our commitment to stakeholders is unwavering. We actively engage with our employees, shareholders, customers, suppliers, and the wider community to ensure a harmonious and mutually beneficial relationship. Throughout the year, we have maintained open channels of communication with employees, systematically providing them with information on matters of concern. Regular consultations with employee representatives have allowed us to consider their valuable input in our decision-making processes and which has influenced decisions ranging from refurbishment priorities to marketing activities. Furthermore, we actively encourage employee involvement through bonus schemes and other initiatives that align their interests with the Group’s performance. Our interactions with suppliers, customers, and other stakeholders are characterised by transparency and fairness. We recognise the importance of fostering strong business relationships with these entities and consider their interests in our strategic decisions. These relationships are critical to our continued success, and we are committed to nurturing them.
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MFT CAPITAL LTD
GROUP STRATEGIC REPORT (CONTINUED)
FOR THE YEAR ENDED 31 MARCH 2023
In conclusion, MFT Capital Ltd remains dedicated to delivering exceptional entertainment experiences to our customers while maintaining financial stability. As we navigate the challenges of an ever-evolving economic landscape, we are confident in our ability to adapt and thrive, thanks to the collective efforts of our dedicated team and the enduring support of our stakeholders.
This report was approved by the board on 30 April 2024 and signed on its behalf.
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MFT CAPITAL LTD
DIRECTORS' REPORT
FOR THE YEAR ENDED 31 MARCH 2023
The directors present their report and the financial statements for the year ended 31 March 2023.
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 . 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 judgments and accounting estimates that are reasonable and prudent;
∙state whether applicable UK Accounting Standards have been followed, subject to any material departures disclosed and explained in the financial statements;
∙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 loss for the year, after taxation, amounted to £4,397,743 (2022 - profit £22,648,604).
During the year, dividends amounting to £3,085,000 (2022 - £nil) were paid.
The directors who served during the year were:
We are actively exploring different brands to add to our portfolio. This strategic move aligns with our commitment to diversify and expand our business offerings.
The Group has employment policies which give full and fair consideration for applicants and employees of disabled persons, having regard to their particular aptitudes and abilities. Where possible, the Group will make appropriate changes and provide training to ensure those who may become disabled whilst employed, can continue in employment, and will otherwise provide training and support for the career development and promotion of any such employees within the Group.
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MFT CAPITAL LTD
DIRECTORS' REPORT (CONTINUED)
FOR THE YEAR ENDED 31 MARCH 2023
Our commitment to stakeholders is unwavering. We actively engage with our employees, shareholders, customers, suppliers, and the wider community to ensure a harmonious and mutually beneficial relationship. Throughout the year, we have maintained open channels of communication with employees, systematically providing them with information on matters of concern. Regular consultations with employee representatives have allowed us to consider their valuable input in our decision-making process and led to changes in various facets of the business including changes to how we rota effectively so not to just maximise productivity but allow employees a better work balance. The management team and board ensure they visit new and existing centers multiple times per year and attend the monthly management meetings. This engagement has enabled us to deliver internal training and wellbeing initiatives to support the team. Face to face training was fully re-established following the COVID-19 impacted previous period. All feedback is collated in the company’s internal database as discussed by management and actions being identified and put in place. Furthermore, we actively encourage employee involvement through bonus schemes and other initiatives that align their interests with the Group's performance
Our interactions with suppliers, customers, and other stakeholders are characterised by transparency and fairness. We recognise the importance of fostering strong business relationships with these entities and consider their interests in our strategic decisions. These relationships are critical to our continued success, and we are committed to nurturing them. In conclusion, MFT Capital Ltd remains dedicated to delivering exceptional entertainment experiences to our customers while maintaining financial stability. As we navigate the challenges of an ever-evolving economic landscape, we are confident in our ability to adapt and thrive, thanks to the collective efforts of our dedicated team and the enduring support of our stakeholders.
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MFT CAPITAL LTD
DIRECTORS' REPORT (CONTINUED)
FOR THE YEAR ENDED 31 MARCH 2023
Quantification and reporting methodology
We have followed 2019 HM Government environmental reporting guidelines to ensure compliance with the SECR requirements. The UK government issued “Greenhouse gas reporting: conversion factors 2023” conversion figures for CO2e were used. Intensity measurement The chosen intensity measurement ratio is number of operating sites.
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MFT CAPITAL LTD
DIRECTORS' REPORT (CONTINUED)
FOR THE YEAR ENDED 31 MARCH 2023
Measures taken to improve energy efficiency
MFT Capital Ltd continue to strive for energy and carbon reduction arising from their activities. During this reporting period MFT Capital have: • Continued to move to 100% renewable supplies. • Introduced PIR lighting. • Replaced normal lights to energy saving Lights-LED • Encouraged General Managers to pool share for company meetings.
Materiality
MFT Capital Ltd are reporting upon all the required fuel sources as per SECR requirements. UK government fuel properties used to convert to kWh and tCO2e. Future developments The Group will continue to roll out selectively its Flip Out and Putt Putt Social brands by opening new sites across the UK and to explore further opportunities to grow the We Do Play brand via franchising with suitable partners.
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MFT CAPITAL LTD
DIRECTORS' REPORT (CONTINUED)
FOR THE YEAR ENDED 31 MARCH 2023
The following loss making subsidiaries were disposed of post year end and subsequently left the MFT Capital Ltd Group:
- F.O Admin Ltd on 6 October 2023 - F.O Three Ltd on 6 October 2023 - F.O Fifteen Ltd on 6 October 2023 - F.O Seventeen Ltd on 6 October 2023 - J O A Leisure Limited on 1 November 2023 Despite the best efforts of the board and management of MFT Capital Ltd Group, three of the five companies below were negatively contributing to group level profitability. The other two disposed companies (J O A Leisure Limited and F.O Three Ltd) were unable to generate sufficient cash to fund its operations and financing costs. The revenue and profit after tax for the disposed subsidiaries for the year ended 31 March 2023 are as follows: Revenue Profit/(loss) after tax £ £ F.O Admin Ltd 2,236,192 (1,003,661) F.O Three Ltd 797,041 80,504 F.O Fifteen Ltd 814,420 (173,256) F.O Seventeen Ltd 922,664 (321,740) J O A Leisure Limited 2,895,495 257,247 The effect on the Group of the disposal of the above five companies post year-end, is a loss of revenue of £2.7k and an increase in projected net profit, as the five companies were contributing a net loss, of £903k prior to their removal from the Group. The movement out of the Group resulted in an increase in net assets of £1.796m at the relevant disposal dates and a subsequent profit on disposal of £838k.
The auditors, Haysmacintyre LLP, will be proposed for reappointment in accordance with section 485 of the Companies Act 2006.
This report was approved by the board on
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MFT CAPITAL LTD
INDEPENDENT AUDITORS' REPORT TO THE MEMBERS OF MFT CAPITAL LTD
We have audited the financial statements of MFT Capital Ltd (the 'parent Company') and its subsidiaries (the 'Group') for the year ended 31 March 2023, which comprise the Consolidated Profit and Loss Account, the Consolidated Balance Sheet, the Company Balance Sheet, the Consolidated Statement of Cash Flows, the Consolidated Statement of Changes in Equity, the 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.
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MFT CAPITAL LTD
INDEPENDENT AUDITORS' REPORT TO THE MEMBERS OF MFT CAPITAL LTD (CONTINUED)
The other information comprises the information included in the Annual Report other than the financial statements and our Auditors' Report thereon. The directors are responsible for the other information contained within the Annual Report. Our opinion on the financial statements does not cover the other information and, except to the extent otherwise explicitly stated in our report, we do not express any form of assurance conclusion thereon. Our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the course of the audit, or otherwise appears to be materially misstated. If we identify such material inconsistencies or apparent material misstatements, we are required to determine whether this gives rise to a material misstatement in the financial statements themselves. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact.
We have nothing to report in this regard.
In our opinion, based on the work undertaken in the course of the audit:
∙the information given in the 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 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.
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MFT CAPITAL LTD
INDEPENDENT AUDITORS' REPORT TO THE MEMBERS OF MFT CAPITAL LTD (CONTINUED)
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an Auditors' Report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with ISAs (UK) will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these 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:
Explanation as to what extent the audit was considered capable of detecting irregularities, including fraud Based on our understanding of the Group and Parent Company and industry, we identified that the principal risks of non-compliance with laws and regulations related to regulatory requirements for trampolining and indoor leisure activity businesses, such as minimum wage and health and safety regulations, and we considered the extent to which non-compliance might have a material effect on the financial statements. We also considered those laws and regulations that have a direct impact on the preparation of the financial statements, such as the Companies Act 2006, income tax, payroll tax and sales tax. We evaluated management’s incentives and opportunities for fraudulent manipulation of the financial statements (including the risk of override of controls), and determined that the principal risks were related to posting inappropriate journal entries to revenue and management bias in accounting estimates. Audit procedures performed by the engagement team included: - inspecting correspondence with regulators and tax authorities; - discussions with management and reviewing board minutes for indications of known or suspected instances of non-compliance with laws and regulation and fraud; - evaluating management’s controls designed to prevent and detect irregularities; - reviewing sales either side of the year end to ensure that the income has been recognised in the correct financial period; - identifying and testing journals, in particular journal entries posted with a round sum value, that significantly impact profit, are outside of the course of ordinary trading activities or contain key words; and; - challenging assumptions and judgements made by management in their critical accounting estimates, particularly in respect of their assessment of impairment of the carrying value of goodwill and intangible assets; and the recoverability of intercompany debtors.
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MFT CAPITAL LTD
INDEPENDENT AUDITORS' REPORT TO THE MEMBERS OF MFT CAPITAL LTD (CONTINUED)
Due to the inherent limitations of an audit, there is a risk that we will not detect all irregularities, including those leading to a material misstatement in the financial statements or non-compliance with regulation. This risk increases the more that compliance with a law or regulation is removed from the events and transactions reflected in the financial statements, as we will be less likely to become aware of instances of non-compliance. The risk is also greater regarding irregularities occurring due to fraud rather than error, as fraud involves intentional concealment, forgery, collusion, omission or misrepresentation.
A further description of our responsibilities for the audit of the financial statements is located on the Financial Reporting Council's website at: www.frc.org.uk/auditorsresponsibilities. This description forms part of our Auditors' Report.
This report is made solely to the Company's shareholders, 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 shareholders 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 shareholders, as a body, for our audit work, for this report, or for the opinions we have formed.
for and on behalf of
Statutory Auditors
10 Queen Street Place
EC4R 1AG
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MFT CAPITAL LTD
CONSOLIDATED PROFIT AND LOSS ACCOUNT
FOR THE YEAR ENDED 31 MARCH 2023
Page 15
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MFT CAPITAL LTD
Page 16
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MFT CAPITAL LTD
REGISTERED NUMBER: 11618864
CONSOLIDATED BALANCE SHEET
AS AT 31 MARCH 2023
Page 17
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MFT CAPITAL LTD
REGISTERED NUMBER: 11618864
CONSOLIDATED BALANCE SHEET (CONTINUED)
AS AT 31 MARCH 2023
The financial statements were approved and authorised for issue by the board and were signed on its behalf on 30 April 2024.
The notes on pages 25 to 61 form part of these financial statements.
Page 18
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MFT CAPITAL LTD
REGISTERED NUMBER: 11618864
COMPANY BALANCE SHEET
AS AT 31 MARCH 2023
The financial statements were approved and authorised for issue by the board and were signed on its behalf on
The notes on pages 25 to 61 form part of these financial statements.
Page 19
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CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 MARCH 2023
Page 20
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MFT CAPITAL LTD
COMPANY STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 MARCH 2023
Page 21
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MFT CAPITAL LTD
CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED 31 MARCH 2023
Page 22
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MFT CAPITAL LTD
CONSOLIDATED STATEMENT OF CASH FLOWS (CONTINUED)
FOR THE YEAR ENDED 31 MARCH 2023
Page 23
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MFT CAPITAL LTD
CONSOLIDATED ANALYSIS OF NET DEBT
FOR THE YEAR ENDED 31 MARCH 2023
Page 24
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MFT CAPITAL LTD
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2023
MFT Capital Ltd is a private company, limited by shares, incorporated in England and Wales with the registration number 11618864. The address of the registered office is Anglia House 6 Central Avenue, St Andrews Business Park, Thorpe St Andrew, Norwich, Norfolk, NR7 0HR.
The financial statements are rounded to the nearest £.
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 judgment 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 Profit and Loss Account 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 Profit and Loss Account from the date on which control is obtained. They are deconsolidated from the date control ceases.
The directors have, at the time of approving the financial statements, a reasonable expectation that the group has adequate resources to continue in operational existence for the foreseeable future. Thus they adopt a going concern basis of accounting in preparing the financial statements. The directors have considered a period of 12 months from the balance sheet date.
Page 25
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MFT CAPITAL LTD
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2023
2.Accounting policies (continued)
Functional and presentation currency
Transactions and balances
Page 26
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MFT CAPITAL LTD
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2023
2.Accounting policies (continued)
Revenue from customers is the total amount receivable by the Group for goods and services supplied, excluding VAT and discounts, and excludes amounts collected on behalf of third parties. The Group’s performance obligations in respect of individual revenue streams are outlined below. Revenue arising from Flip Out attendance or mini golf is recognised when the customer actually plays, with deposits paid in advance being held on the balance sheet until that time and then recognised as income. Revenue for food and drink is recognised when the product has been transferred to the buyer at the point of sale, which is generally when payment is received. Revenue for amusements is recognised when the customer plays the amusement machine. Revenue from customers is disaggregated by major product and service lines, being activities, food and drink, amusements, mini golf, installation of other machines and other. For the franchisor business new franchise fees are recognised when the new franchisee commences operation of the business and ongoing royalty fees are recognised at the tax point on a weekly basis. Regarding lease incentives – capital contributions received from landlords are released to the Profit and Loss over the term of the lease in accordance with FRS 102.
Page 27
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MFT CAPITAL LTD
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2023
2.Accounting policies (continued)
Any recharges of costs outside of the group are recognised to match with their cost of sales as invoiced. Given the nature of the Group’s revenue streams, recognition of revenue is not considered to be a significant area of judgement. Grants of a revenue nature are recognised in the Consolidated Profit and Loss Account in the same period as the related expenditure.
Page 28
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MFT CAPITAL LTD
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2023
2.Accounting policies (continued)
Page 29
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MFT CAPITAL LTD
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2023
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:
The board have estimated the useful economic lives to the best of their ability, with guidance from FRS 102 paragraph 18.20, and have concluded the goodwill and trademarks will generate economic benefits for the Group over a period of 10 years.
Depreciation is charged so as to allocate the cost of assets less their residual value over their estimated useful lives.
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.
Page 30
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MFT CAPITAL LTD
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2023
2.Accounting policies (continued)
The Group has recognised a provision for dilapidations due to the requirement to return its operating sites back to their original condition at the end of the rental lease.
The directors consider the estimated costs related to returning to site to its original condition to be capital in nature and thus have been capitalised and included within tangible fixed assets. The book value of the capitalised asset is reduced equally over the term of the lease in the form of an impairment charge. The impairment charge is recognised immediately in profit and loss. Loans receivable are measured initially at fair value, net of transaction costs, and are measured subsequently at amortised cost using the effective interest method, less any impairment.
Page 31
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MFT CAPITAL LTD
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2023
2.Accounting policies (continued)
Provisions are measured as the best estimate of the amount required to settle the obligation, taking into account the related risks and uncertainties.
The Group has elected to apply the provisions of Section 11 “Basic Financial Instruments” of FRS 102 to all of its financial instruments.
The Group has elected to apply the recognition and measurement provisions of IFRS 9 Financial Instruments (as adopted by the UK Endorsement Board) with the disclosure requirements of Sections 11 and 12 and the other presentation requirements of FRS 102.
Financial instruments are recognised in the Group's Balance Sheet when the Group 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.
Basic financial assets
Basic financial assets, which include trade and other receivables, cash and bank balances, are initially measured at their transaction price including transaction costs and are subsequently carried at their amortised cost using the effective interest method, less any provision for impairment, 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.
Discounting is omitted where the effect of discounting is immaterial. The Group's cash and cash equivalents, trade and most other receivables due with the operating cycle fall into this category of financial instruments.
Financial liabilities
Financial liabilities and equity instruments are classified according to the substance of the contractual arrangements entered into. An equity instruments any contract that evidences a residual interest in the assets of the Group after the deduction of all its liabilities.
Basic financial liabilities, which include trade and other payables, bank loans, other loans and loans due to fellow group companies are initially measured at their transaction price after transaction costs. When this constitutes a financing transaction, whereby the debt instrument is measured at the present value of the future receipts discounted at a market rate of interest. Discounting is omitted where the effect of discounting is immaterial.
Page 32
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MFT CAPITAL LTD
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2023
2.Accounting policies (continued)
Debt instruments are subsequently carried at their amortised cost using the effective interest rate method.
Trade payables are obligations to pay for goods and services that have been acquired in the ordinary course of business from suppliers. Trade payables are classified as current liabilities if the payment is due within one year. If not, they represent non-current liabilities. Trade payables are initially recognised at their transaction price and subsequently are measured at amortised cost using the effective interest method. Discounting is omitted where the effect of discounting is immaterial.
Derecognition of financial instruments
Derecognition of financial assets
Financial assets are derecognised when their contractual right to future cash flow expire, or are settled, or when the Group transfers the asset and substantially all the risks and rewards of ownership to another party. If significant risks and rewards of ownership are retained after the transfer to another party, then the Group will continue to recognise the value of the portion of the risks and rewards retained.
Derecognition of financial liabilities
Financial liabilities are derecognised when the Group's contractual obligations expire or are discharged or cancelled.
Page 33
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MFT CAPITAL LTD
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2023
The key assumptions concerning the future and other key sources of estimating uncertainty at the reporting date that have a significant risk of causing a material adjustment to the carrying amount of assets and liabilities within the next financial year include: Useful economic life of property, plant and equipment The annual depreciation charge for property, plant and equipment is sensitive to change in the estimated useful economic lives and residual values of the assets. The economic lives and residual values are reassessed annually and, where necessary, amended to reflect current conditions. The total depreciation charge on the Group’s property, plant and equipment amounted to £860,445 during the year. Impairment of debtors The Group and Company makes an estimate of the recoverable value of trade, intragroup and other debtors. When assessing the impairment of trade and other debtors the directors consider factors including age, independent credit rating and historical experience. The total impairment charge on the Group’s debtors amounted to £558,915 for the year. Impairment of property, plant and equipment The value of property, plant and equipment of £10,586,453 (2022: £6,354,555) is sensitive to changes from both internal and external factors. The Group assesses the recoverability and future economic value of its property, plant and equipment annually and contracts a surveyor where they believe the carrying value to be materially dissimilar from its fair value. When assessing the recoverability and future economic value of property, plant and equipment, the directors consider factors including age, location and desirability. The total impairment charge on the Group’s property, plant and equipment amounted to £75,900 for the year. Provision for dilapidations The Group has contracted a surveyor to assess the Group's main Flip Out site for dilapidations. The surveyor established an estimated cost value that would be required in order to bring the site back to the condition before any installation of plant and equipment. The dilapidation cost per square foot for the assessed site has been applied to the square footage of the respective Company's sites in order to establish the Group's dilapidation provision of £999,351 (2022: £1,394,686). The total dilapidation charge for the Group amounted to £106,533 during the year.
Page 34
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MFT CAPITAL LTD
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2023
Analysis of turnover by country of destination:
Page 35
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MFT CAPITAL LTD
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2023
Page 36
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MFT CAPITAL LTD
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2023
Page 37
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MFT CAPITAL LTD
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2023
Page 38
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MFT CAPITAL LTD
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2023
12.Taxation (continued)
Changes to the UK corporation tax rates were made as part of the 2021 Budget. These were substantially enacted on 24 May 2021. This included an increase in the main rate from 19% to 25% from 1 April 2023. The Group is taxed at a rate of 25% unless its profits are sufficiently low enough to qualify for a lower rate of tax, the lowest being 19%.
Deferred tax Deferred tax assets have been recognised in respect of all tax losses and other temporary differences giving rise to deferred tax assets where the directors believe it is probable that these assets will be recovered. The Group has tax losses of approximately £3,214k as at 31 March 2023 which, subject to agreement with taxation authorities, are available to carry forward against future profits. The tax value of such losses amounted to approximately £803k. A deferred tax asset has been recognised in respect of £1,131k of these losses to offset the deferred tax liability in respect of fixed asset temporary differences. A deferred tax asset has therefore not been recognised in respect of the remaining tax losses of £2,083k.
Page 39
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MFT CAPITAL LTD
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2023
Page 40
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MFT CAPITAL LTD
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2023
Page 41
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Page 42
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16.Tangible fixed assets (continued)
Page 43
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MFT CAPITAL LTD
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2023
16.Tangible fixed assets (continued)
Page 44
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MFT CAPITAL LTD
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2023
Page 45
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MFT CAPITAL LTD
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2023
Page 46
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MFT CAPITAL LTD
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2023
Indirect subsidiary undertakings (continued)
Page 47
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MFT CAPITAL LTD
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2023
Indirect subsidiary undertakings (continued)
Page 48
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MFT CAPITAL LTD
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2023
Indirect subsidiary undertakings (continued)
Page 49
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MFT CAPITAL LTD
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2023
Page 50
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MFT CAPITAL LTD
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2023
Bank overdrafts are secured by way of fixed and floating charges over the Group's assets. Bank loans are secured by way of fixed and floating charges over the Group's property. Other loans are secured by way of fixed and floating charges over the Group's property. Finance leases are secured on the asset financed. Other creditors are secured over the assets financed.
Page 51
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MFT CAPITAL LTD
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2023
Bank loans are secured by way of fixed and floating charges over the Group's property. Other loans are secured by way of fixed and floating charges over the Group's property.
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MFT CAPITAL LTD
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2023
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MFT CAPITAL LTD
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2023
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MFT CAPITAL LTD
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2023
Share premium account
Profit and loss account
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MFT CAPITAL LTD
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2023
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MFT CAPITAL LTD
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2023
27.Business combinations (continued)
Reclassification of creditors falling due within one year This relates to the correction of accruals and deferred income of £1,741,757 which were previously incorrectly disclosed within creditors: amounts falling due within one year but which should have should have been recognised as creditors: amounts falling due after more than one year.
As part of the disposal of the BOOM subsidiaries in the year ended 31 March 2022 the Group was entitled to contingent equity consideration of up to 25m shares in the seller, with the exact quantity of shares receivable dependent on various earn out requirements being met. As at 31 March 2022 it was estimated that all earn out requirements would be met, entitling the Group to the full 25m shares and so an other debtor of £7,375,000 was recognised based on the fair value of these shares as at the date of the Statement of Financial Position (see Note 19 for further detail).
Following the receipt of new information from the seller during the year ended 31 March 2023, it has been confirmed that the Group has only met the aforementioned earn our requirements to entitle it to 23.9m shares in the seller. As a result of this change in estimate there has been a £317,296 reduction in the debtor recognised as at 31 March 2023, which has been recognised within fair value movements in the Statement of Comprehensive Income.
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MFT CAPITAL LTD
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2023
For the financial year ended 31 March 2023, the below subsidiaries are exempt from the requirements stipulating that they be audited since they fulfil all the conditions for exemption under section 479A of the Companies Act 2006.
F.O IP Ltd F.O Global IP Ltd F.O Ventures Ltd Flip Out Ltd F.O Six Ltd F.O Ten Ltd F.O Sixteen Ltd F.O Eighteen Ltd F.O Twenty Ltd F.O Twenty One Ltd F.O Twenty Two Ltd F.O Twenty Three Ltd F.O Twenty Four Ltd F.O Franchise Ltd AGB Capital Ltd S L Trampolines Ltd Putt IP Ltd PPN Ventures Ltd PPN Franchise Ltd PPN Two Ltd PPN Three Ltd Putt Noodle East Ltd WDPC Trading Ltd The outstanding liabilities at the balance sheet date of the above subsidiary undertakings have been guaranteed by MFT Capital Ltd pursuant to s479A to s479C of the Companies Act 2006. The aggregate liabilities of these subsidiaries at 31 March 2023 was £20,337,858.
The Company operates a defined contributions pension scheme. The assets of the scheme are held separately from those of the Company in an independently administered fund. The pension cost charge represents contributions payable by the Company to the fund and amounted to £57,120 (2022 - £23,521). Contributions totalling £13,499 (2022 - £14,509) were payable to the fund at the balance sheet date and are included in creditors.
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MFT CAPITAL LTD
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2023
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MFT CAPITAL LTD
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2023
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MFT CAPITAL LTD
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2023
- F.O Admin Ltd on 6 October 2023 - F.O Three Ltd on 6 October 2023 - F.O Fifteen Ltd on 6 October 2023 - F.O Seventeen Ltd on 6 October 2023 - J O A Leisure Limited on 1 November 2023 Despite the best efforts of the board and management of MFT Capital Ltd Group, all five of these companies were making a loss and negatively contributing to group level EBITDA. The revenue and profit after tax for the disposed subsidiaries for the year ended 31 March 2023 are as follows: Revenue Profit after tax £ £ F.O Admin Ltd 2,236,192 (1,003,661) F.O Three Ltd 797,041 80,504 F.O Fifteen Ltd 814,420 (173,256) F.O Seventeen Ltd 922,664 (321,740) J O A Leisure Limited 2,895,495 257,247 The effect on the Group of the disposal of the above five companies post year-end, is a loss of revenue of £2.7k and an increase in projected net profit, as the five companies were contributing a net loss, of £903k prior to their removal from the Group. The movement out of the Group resulted in an increase in net assets of £1.796m at the relevant disposal dates and a subsequent profit on disposal of £838k.
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