REGISTERED NUMBER: |
STRATEGIC REPORT, REPORT OF THE DIRECTORS AND |
AUDITED FINANCIAL STATEMENTS |
FOR THE YEAR ENDED 31 DECEMBER 2023 |
FOR |
MLS OPERATIONS LIMITED |
REGISTERED NUMBER: |
STRATEGIC REPORT, REPORT OF THE DIRECTORS AND |
AUDITED FINANCIAL STATEMENTS |
FOR THE YEAR ENDED 31 DECEMBER 2023 |
FOR |
MLS OPERATIONS LIMITED |
MLS OPERATIONS LIMITED (REGISTERED NUMBER: 10523704) |
CONTENTS OF THE FINANCIAL STATEMENTS |
FOR THE YEAR ENDED 31 DECEMBER 2023 |
Page |
Company Information | 1 |
Strategic Report | 2 |
Report of the Directors | 5 |
Report of the Independent Auditors | 9 |
Statement of Comprehensive Income | 13 |
Balance Sheet | 14 |
Statement of Changes in Equity | 15 |
Cash Flow Statement | 16 |
Notes to the Financial Statements | 17 |
MLS OPERATIONS LIMITED |
COMPANY INFORMATION |
FOR THE YEAR ENDED 31 DECEMBER 2023 |
DIRECTORS: |
REGISTERED OFFICE: |
REGISTERED NUMBER: |
SENIOR STATUTORY AUDITOR: |
AUDITORS: |
Chartered Accountants |
and Statutory Auditors |
34-40 High Street |
Wanstead |
London |
E11 2RJ |
BANKERS: |
26 Broad Street |
Reading |
Berkshire |
RG1 2BU |
MLS OPERATIONS LIMITED (REGISTERED NUMBER: 10523704) |
STRATEGIC REPORT |
FOR THE YEAR ENDED 31 DECEMBER 2023 |
The directors present their strategic report for the year ended 31 December 2023. |
REVIEW OF BUSINESS |
Despite the challenges encountered during the year, the company has demonstrated resilience and a strong commitment to growth. |
In 2023, the company achieved a turnover of £73m, representing a significant increase from the previous year’s £60m. This growth was driven by increased market demand, inflation adjusted new selling prices and the opening of three new stores. Additionally, major refurbishment work was completed on three existing stores, enhancing the overall customer experience. The total number of stores now stands at 18. |
The Company's key performance indicators are as follows: |
31 December 2023 | 31 December 2022 |
£ | £ |
Turnover | 73,411,723 | 59,930,069 |
Gross profit | 48,652,622 | 39,559,424 |
Gross profit % | 66.27% | 66.01% |
Operating profit | 1,033,755 | 394,482 |
The increase in turnover and gross profit margin has contributed to an improvement in operating profit. |
The average number of employees increased from 1,461 to 1,679, reflecting the company’s growth and the need for additional staff to support both new and existing stores. |
The net assets of the company were £3.3m (2022: £3.2m) at the balance sheet date, reflecting the solid position of the company from a solvency and liquidity perspective. This strong balance sheet provides a foundation on which the company can continue to grow and prosper. |
The company plans to continue its expansion by acquiring more stores and invest in innovative technologies to enhance operational efficiency and customer satisfaction. |
MLS OPERATIONS LIMITED (REGISTERED NUMBER: 10523704) |
STRATEGIC REPORT |
FOR THE YEAR ENDED 31 DECEMBER 2023 |
PRINCIPAL RISKS AND UNCERTAINTIES |
The management of the business and the nature of the company's strategy are subject to a number of risks. |
The Directors have set out below the principal risks facing the business. |
The Directors are of the opinion that a thorough risk management process is adopted which involves a formal review of all risks identified below. Where possible, processes are in place to mitigate such risks. |
Economic downturn |
The success of the business is reliant on consumer spending. |
In response to this continuous risk, senior management aim to keep abreast of economic conditions. In cases of severe economic downturn, marketing and pricing strategies will be modified to reflect the new market conditions. |
Inflation and the cost of living crisis |
Global inflationary pressures that have arisen following recent global geo-political uncertainty and conflicts in Ukraine and the Middle East continue to represent the largest risk to the business. These pressures are seen most clearly in relation to: |
Food cost inflation |
The Company is continually assessing all risks that food cost inflation may bring with the aim to mitigate future threats this may have on the business. |
Wage cost inflation |
The Company is continually affected by wage cost inflation and pressures within the labour market. The Company monitors the market to ensure complete compliance with labour market regulations, and maintains employment policies, remuneration and benefits packages that are designed to be competitive with other companies, as well as providing employees with fulfilling career opportunities. |
Utilities costs |
Increasing volatility, uncertainty, cost pressures and general environmental awareness in the UK market has resulted in increased pressure on the company in recent times. To manage and help mitigate the risk associated with these pressures, the company is party to a number of Power Purchase Agreements (PPAs) for the provision of cost-effective clean energy from environmentally friendly energy sources. |
Competition |
The market in which the Company operates is highly competitive. As a result, the Company is subject to a high level of price sensitivities in its consumer-led market. Policies of constantly assessing our pricing strategy and ongoing market research are in place to mitigate such risks. |
Liquidity risk |
As a result of the positive cash flows from operating activities achieved in the year and expected in future periods, the Directors do not consider liquidity or cashflow risk to be an issue. The Company make use of bank facilities in order to finance long term capital and refurbishment expenditure. The Directors also continually monitor cash flow forecasts in order to further manage liquidity risk. |
Brexit |
The areas where Brexit may impact our business include the access and cost of both labour and food. We continue to work with our business partners to mitigate any potential implications. |
With these risks and uncertainties in mind, we are aware that any plans for the future development of the business may be subject to unforeseen future events outside of our control; hence, we are constantly assessing our plans in line with the current environment. |
MLS OPERATIONS LIMITED (REGISTERED NUMBER: 10523704) |
STRATEGIC REPORT |
FOR THE YEAR ENDED 31 DECEMBER 2023 |
SECTION 172(1) STATEMENT |
The board of directors of MLS Operations Limited (the "Board") believe, individually and collectively, that they have always acted in ways they consider, in good faith, most likely to promote the success of the company for the benefit of its members as a whole (having regard to the stakeholders and matters set out in s172(1)(a-f) of the Companies Act) ("s.172"). |
The success of the Company is the driving factor behind the decisions made by the directors. Decision making processes are structured to enable the directors to evaluate the merit of proposed business activities and the likely consequences of its decisions over the short, medium, and long term. |
Consequences of the Company’s Decision-Making Long Term |
The Board meets to measure the business objectives and as a part of its meetings it reviews the effects of the conduct of the business on the factors set out in this statement. The Board are focussed and are kept fully informed as to the continuance of the business and its compliance with trading laws and its obligations under s.172. |
Our Employees |
Our people are fundamental to our success. We work hard to create opportunities for all our people, regardless of gender, age, or stage of development. Understanding how our people feel about the business is vital. It helps us ensure that we are giving them the right support to achieve their potential and to serve our customers well. |
We actively encourage our employees to participate in feedback sessions such as the "Big Conversation", "Love to Listen" and their Annual Performance Review alongside operating an Open Door Policy in all our restaurants. |
Our Customers |
Our customers are the reason for our existence, and we therefore strive to provide high quality food and service, in a clean, welcoming environment and at a great value. |
It is our obligation and desire to maintain high standards with regular customer feedback monitoring and operating an external Customer Satisfaction programme "Food for Thought" that collects customer comments. |
Our Suppliers |
Long-term commitments with our suppliers has enabled them to grow with us and drive positive change within their own businesses. This Company recognises that the strength of our relationships with our suppliers are important to our long-term success. The Company’s board is regularly briefed on supplier feedback and issues. |
Communities and Environment |
The directors carefully consider the impact of the business on communities and the environments in which the Company operates. We ensure the locality surrounding our restaurant is litter free through initiatives implemented to collect the litter. |
Our initiatives include: |
- Recycling units are installed around our restaurants |
- Our paper cups are sent to specialist recycling centres in the UK. |
- Our new paper straws are now 100% recyclable. |
- Our cooking oil is recycled to convert it to bio diesel. |
- Participate in Local Litter Events |
Business Conduct |
The Board take the view that maintaining high standards in business are not only correct but assist in maintaining the good reputation of the Company and its business operation and practices. In all our activities the directors require that our employees and suppliers conduct business with the highest ethical and professional standards by adhering to our Standards of Business Conduct. |
Conduct of the Company with its Members |
All of the Company’s members are directors of the Company and they exercise day to day control over the Company. The members meet regularly to express and discuss their views. |
ON BEHALF OF THE BOARD: |
MLS OPERATIONS LIMITED (REGISTERED NUMBER: 10523704) |
REPORT OF THE DIRECTORS |
FOR THE YEAR ENDED 31 DECEMBER 2023 |
The directors present their report with the financial statements of the company for the year ended 31 December 2023. |
PRINCIPAL ACTIVITY |
The principal activity of the company in the year under review was that of operating quick service restaurants. |
GOING CONCERN |
The Company continued to generate significant operating cash flows and continued to increase operations year on year. Despite this, the balance sheet as at 31 December 2023 shows a net current liability position of £4,011,914 (2022: £2,164,542). |
The Company continues to meet its day to day working capital requirements through operating cash flows and finances all acquisitions and significant refurbishments via a combination of bank finance and working capital. |
Having considered all the relevant facts the directors consider it is appropriate to prepare the financial statements on a going concern basis. |
DIVIDENDS |
Interim dividends of £99,000 (2022: £108,000) were paid during the year. The Directors do not recommend payment of a final dividend. |
FUTURE DEVELOPMENTS |
The company continues to substantially invest in its restaurants as part of an ongoing programme to upgrade the look and feel of its restaurants with new and enhanced equipment and thereby improve its customers' and employees' experience. This forms part of its strategy to grow market share and profitability. |
DIRECTORS |
The directors shown below have held office during the whole of the period from 1 January 2023 to the date of this report. |
ENGAGEMENT WITH EMPLOYEES |
The company does not discriminate between employees or potential employees on grounds of colour, race, ethnic or national origin, sex, disability, age, marital status or religious beliefs. Full consideration is given to applications for employment from those with disabilities who are able to demonstrate that they have the necessary abilities. |
The importance of staff training, equal opportunity, health and safety, environmental matters and the avoidance of sexual harassment is recognised at all levels and is monitored on a regular basis by committees chaired by a director or senior manager reporting directly to the Board. |
STREAMLINED ENERGY AND CARBON REPORTING |
In line with the government's streamlined energy and carbon reporting requirements we are required to report our organisation's carbon emissions for the period 1st January 2023 to 31st December 2023. The year ended 31 December 2022 was the first year that the company has reported. |
Our emissions are reported using the financial control boundary and the methodology used aligns with Defra's Environmental reporting guidelines (2019) and uses the UK government's greenhouse gas reporting conversion factors (2023) to quantify emissions. The total greenhouse gas emissions, reportable under SECR from 1st January 2023 - 31st December 2023, were 2,810 tonnes of carbon dioxide equivalent (tCO2e). These include emissions associated with electricity and natural gas consumption. The number of sites contributing to this report has increased from 15 in 2022 to 18 in 2023. The total greenhouse gas emissions increased by 68% compared to revised 2022 figures, because purchased electricity energy consumption (kWh) has increased by 8% and natural gas energy consumption (kWh) has increased by 53%, from 2022 to 2023. |
MLS OPERATIONS LIMITED (REGISTERED NUMBER: 10523704) |
REPORT OF THE DIRECTORS |
FOR THE YEAR ENDED 31 DECEMBER 2023 |
Notable factors that could have contributed to the movement in emissions are as follows: |
- Increase in productivity (48% increase in revenue) which translated to an increase in total energy consumption. |
- The number of sites reporting on their emissions changed from 2022 to 2023. |
- Revision of methodology to align consumption to the franchisor's AI Track energy consumption figures for FY 2023. |
- The carbon intensity of the grid electricity increased in 2023 for the first time in a few years, by 7%. |
- The methodology for calculating electricity emissions was adjusted to reflect good practice for the inclusion of electrical transport and distribution of losses (T&D losses) (link) under the SECR regulations. |
- Inclusion of refrigeration data available which has been omitted from previous reports. |
As per SECR guidelines, our emission intensity is calculated as the ratio of annual emissions (tCO2e) to the turnover (in £million). For FY 2023, this resulted in an emission intensity of 38.67 tCO2e per £million, which represents a 36% increase compared to the previous year (28.38 tCO2e per £million). |
Greenhouse gas emissions |
Greenhouse gas emissions by year (tCO2e) – location-based |
Emissions source |
2023 |
2022 (revised* |
) |
% Share |
% Change |
Electricity | 2,386 | 1,516 | 85% | 57% |
Natural Gas | 217 | 142 | 8% | 53% |
Refrigerants | 192 | - | 7% | 100% |
Transportation - direct | 0.92 | 0.85 | 0.03% | 8% |
Transportation - indirect | 14.8 | 14.9 | 0.53% | (0.4% | ) |
Total Emissions (tCO2e) | 2,810 | 1,674 | 100% | 68% |
Turnover (£m) | 73 | 59 | 24% |
Intensity (tCO2e per £m) | 38.67 | 28.38 | 36% |
(Location-based reporting uses a national carbon emissions factor to calculate the emissions from the generation of electricity, reflecting the diverse source of electricity generation supplied to the national grid.) |
*The emissions reported for electricity in 2022 has been revised to include Transmission and Distribution losses (T&D) UK Greenhouse Gas Conversion Factors (publishing.service.gov.uk) |
Greenhouse gas emissions by scope (tonnes CO2e) - location-based |
Emissions source | Scope 1 | Scope 2 | Scope 3 | Total |
Electricity | - | 2,196 | 190 | 2,386 |
Natural Gas | 217 | - | - | 217 |
Refrigerants | 192 | - | - | 192 |
Transportation | - | 1 | 15 | 16 |
Total Emissions (tCO2e) | 409 | 2,197 | 205 | 2,811 |
Share of Total | 15% | 78% | 7% | 100% |
Scope 1: Natural gas and purchased fuel (LPG). Scope 2: Electricity (generation). Scope 3: Losses from electricity distribution and transmission (T&D). This only includes emissions reportable under SECR and may not reflect the entire carbon footprint of the organisation. |
Energy consumption |
Energy consumption per fuel type (kWh) |
Emissions source |
2023 |
2022 (revised* |
) |
% Share |
% Change |
Electricity | 10,605,704 | 7,181,837 | 89% | 48% |
Natural Gas | 1,183,590 | 777,744 | 10% | 52% |
Transportation - direct | 4,100 | 4,051 | 0.03% | 1% |
Transportation - indirect | 60,777 | 59,959 | 0.5% | 1% |
Total Emissions (tCO2e) | 11,854,171 | 8,023,591 | 100% | 48% |
MLS OPERATIONS LIMITED (REGISTERED NUMBER: 10523704) |
REPORT OF THE DIRECTORS |
FOR THE YEAR ENDED 31 DECEMBER 2023 |
Greenhouse Gas (GHG) Reporting Methodology Statement |
Reporting Period |
Emissions are reported against accounting year covering the period 1st January to 31st December 2023. |
Boundary, methodology and exclusions |
An 'operational control' approach has been used to define the Greenhouse Gas emissions boundary. |
This approach captures emissions associated with operations in the restaurants. This report covers UK operations only, as required by SECR for Non-Quoted Large Companies. |
This information was collected and reported in line with the methodology set out in the UK Government's Environmental Reporting Guidelines, 2019. |
Emissions have been calculated using the latest conversion factors provided by the UK Government. No other material omissions from the mandatory reporting scope. For Refrigerant emissions, GWP conversion factors have been used (High-GWP Refrigerants | California Air Resources Board, Greenhouse Gas Inventory Guidance: Fugitive Emissions (epa.gov). |
The company's 2022 electricity emissions have been revised. This update and the inclusion of Transport and Distribution factors for emissions calculation is to reflect good practice in UK reporting as detailed in the GHG Conversion Factors: Greenhouse gas reporting: conversion factors 2023 - GOV.UK (www.gov.uk). This revision also incorporates updated conversion factors. |
Energy consumption (in kWh) for periods 1st January 2023 - 31st December 2023 have been used to calculate emissions for FY2023, ending in December 2023. |
2023 consumption data from Franchisor's AI Track were used for the gas, electricity, purchased fuel and refrigerants figures. Gas and electricity consumption includes extrapolation carried out by Aligned Incentives. |
Energy efficiency initiatives |
The company has continued to seek and progress energy efficiency measures, within both the work processes and the use of work equipment. The franchisor is actively taking part in mandatory compliance schemes, such as the Energy Savings Opportunity Scheme, TCFD and considering the implementation of recommendations outlined in the ESOS audit reports. |
The following approaches to energy efficiency are being undertaken by the franchisor and will be |
expanded over the following years: |
- Baselining resource use by bringing online increased effort to collate the data on a range of resources |
- Implementation Strategy being developed and deployed to create significant energy and carbon |
reduction |
- Engagement Strategy with the Supply chain to reduce the associated emissions further |
- Developing Metrics and Targets to reflect performance across our portfolio at the most granular level |
and more in depth data tracking of the use of resources |
- Governance including Board oversight, culture, training and incentives being developed. |
DISCLOSURE IN THE STRATEGIC REPORT |
The Company has chosen to make disclosures in relation to financial risk management and other matters considered to be of strategic importance which would otherwise be in the Directors report within the Strategic Report. |
MLS OPERATIONS LIMITED (REGISTERED NUMBER: 10523704) |
REPORT OF THE DIRECTORS |
FOR THE YEAR ENDED 31 DECEMBER 2023 |
STATEMENT OF DIRECTORS' RESPONSIBILITIES |
The directors are responsible for preparing the Strategic Report, the Report of the Directors and the financial statements in accordance with applicable law and regulations. |
Company law requires the directors to prepare financial statements for each financial year. Under that law the directors have elected to prepare the financial statements in accordance with United Kingdom Generally Accepted Accounting Practice (United Kingdom Accounting Standards and applicable law). Under company law the directors must not approve the financial statements unless they are satisfied that they give a true and fair view of the state of affairs of the company and of the profit or loss of the company for that period. In preparing these financial statements, the directors are required to: |
- | select suitable accounting policies and then apply them consistently; |
- | make judgements and accounting estimates that are reasonable and prudent; |
- | state whether applicable 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 company will continue in business. |
The directors are responsible for keeping adequate accounting records that are sufficient to show and explain the company's transactions and disclose with reasonable accuracy at any time the financial position of the company and enable them to ensure that the financial statements comply with the Companies Act 2006. They are also responsible for safeguarding the assets of the company and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities. |
STATEMENT AS TO DISCLOSURE OF INFORMATION TO AUDITORS |
So far as the directors are aware, there is no relevant audit information (as defined by Section 418 of the Companies Act 2006) of which the company's auditors are unaware, and each director has taken all the steps that he or she ought to have taken as a director in order to make himself or herself aware of any relevant audit information and to establish that the company's auditors are aware of that information. |
AUDITORS |
The auditors, THP Limited, will be proposed for re-appointment. |
ON BEHALF OF THE BOARD: |
REPORT OF THE INDEPENDENT AUDITORS TO THE MEMBERS OF |
MLS OPERATIONS LIMITED |
Opinion |
We have audited the financial statements of MLS Operations Limited (the 'company') for the year ended 31 December 2023 which comprise the Statement of Comprehensive Income, Balance Sheet, Statement of Changes in Equity, Cash Flow Statement and Notes to the Financial Statements, including a summary of significant accounting policies. The financial reporting framework that has been applied in their preparation is applicable law and United Kingdom Accounting Standards, including 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 31 December 2023 and of its profit for the year then ended; |
- | have been properly prepared in accordance with United Kingdom Generally Accepted Accounting Practice; and |
- | have been prepared in accordance with the requirements of the Companies Act 2006. |
Basis for opinion |
We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and applicable law. Our responsibilities under those standards are further described in the Auditors' responsibilities for the audit of the financial statements section of our report. We are independent of the company in accordance with the ethical requirements that are relevant to our audit of the financial statements in the 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. |
Other information |
The directors are responsible for the other information. The other information comprises the information in the Strategic Report and the Report of the Directors, but does not include the financial statements and our Report of the Auditors thereon. |
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. |
In connection with our audit of the financial statements, 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 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 the audit: |
- | the information given in the Strategic Report and the Report of the Directors for the financial year for which the financial statements are prepared is consistent with the financial statements; and |
- | the Strategic Report and the Report of the Directors have been prepared in accordance with applicable legal requirements. |
REPORT OF THE INDEPENDENT AUDITORS TO THE MEMBERS OF |
MLS OPERATIONS LIMITED |
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 Report of the Directors. |
We have nothing to report in respect of the following matters where 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 directors' 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 Statement of Directors' Responsibilities set out on page eight, 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 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. |
REPORT OF THE INDEPENDENT AUDITORS TO THE MEMBERS OF |
MLS OPERATIONS LIMITED |
Auditors' 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 a Report of the Auditors 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. |
The extent to which our procedures are capable of detecting irregularities, including fraud is detailed below: |
Our approach to identifying and assessing the risks of material misstatement in respect of irregularities, including fraud and non-compliance with laws and regulations, was as follows: |
- the engagement partner ensured that the engagement team collectively had the appropriate competence, capabilities and skills to identify or recognise non-compliance with applicable laws and regulations; |
- we identified the laws and regulations applicable to the company through discussions with the directors and other management, and from our commercial knowledge and experience of the sector in which the company operates; |
- we focused on specific laws and regulations which we considered may have a direct material effect on the financial statements or the operations of the company, including the Companies Act 2006, taxation legislation and data protection, anti-bribery, employment, environmental, food hygiene and health and safety legislation; |
- we assessed the extent of compliance with the laws and regulations identified above through making enquiries of management and inspecting legal correspondence; and |
- identified laws and regulations were communicated within the audit team regularly and the team remained alert to instances of non-compliance throughout the audit. |
We assessed the susceptibility of the company's financial statements to material misstatement, including obtaining an understanding of how fraud might occur, by: |
- making enquiries of management as to where they considered there was susceptibility to fraud, their knowledge of actual, suspected and alleged fraud; and |
- considering the internal controls in place to mitigate risks of fraud and non-compliance with laws and regulations. |
To address the risk of fraud through management bias and override of controls, we: |
- performed analytical procedures to identify any unusual or unexpected relationships; |
- tested journal entries to identify unusual transactions; |
- assessed whether judgements and assumptions made in determining the accounting estimates set out in note 3 were indicative of potential bias; and |
- investigated the rationale behind significant or unusual transactions. |
In response to the risk of irregularities and non-compliance with laws and regulations, we designed procedures which included, but were not limited to: |
- agreeing financial statement disclosures to underlying supporting documentation; |
- enquiring of management as to actual and potential litigation and claims; and |
- reviewing correspondence with HMRC and any other relevant regulators as required. |
There are inherent limitations in our audit procedures described above. The more removed that laws and regulations are from financial transactions, the less likely it is that we would become aware of non-compliance. Auditing standards also limit the audit procedures required to identify non-compliance with laws and regulations to enquiry of the directors and other management and the inspection of regulatory and legal correspondence, if any. |
Material misstatements that arise due to fraud can be harder to detect than those that arise from error as they may involve deliberate concealment or collusion. |
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 Report of the Auditors. |
REPORT OF THE INDEPENDENT AUDITORS TO THE MEMBERS OF |
MLS OPERATIONS LIMITED |
Use of our 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 a Report of the Auditors 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 |
and Statutory Auditors |
34-40 High Street |
Wanstead |
London |
E11 2RJ |
MLS OPERATIONS LIMITED (REGISTERED NUMBER: 10523704) |
STATEMENT OF COMPREHENSIVE INCOME |
FOR THE YEAR ENDED 31 DECEMBER 2023 |
2023 | 2022 |
Notes | £ | £ |
TURNOVER |
Cost of sales |
GROSS PROFIT |
Administrative expenses |
OPERATING PROFIT | 5 |
Interest payable and similar expenses | 6 |
PROFIT BEFORE TAXATION |
Tax on profit | 7 |
PROFIT FOR THE FINANCIAL YEAR |
MLS OPERATIONS LIMITED (REGISTERED NUMBER: 10523704) |
BALANCE SHEET |
31 DECEMBER 2023 |
2023 | 2022 |
Notes | £ | £ | £ | £ |
FIXED ASSETS |
Intangible assets | 9 |
Tangible assets | 10 |
Investments | 11 |
CURRENT ASSETS |
Stocks | 12 |
Debtors | 13 |
Cash at bank |
CREDITORS |
Amounts falling due within one year | 14 |
NET CURRENT LIABILITIES | ( |
) | ( |
) |
TOTAL ASSETS LESS CURRENT LIABILITIES |
CREDITORS |
Amounts falling due after more than one year |
15 |
( |
) |
( |
) |
PROVISIONS FOR LIABILITIES | 18 | ( |
) | ( |
) |
NET ASSETS |
CAPITAL AND RESERVES |
Called up share capital | 19 |
Retained earnings | 20 |
SHAREHOLDERS' FUNDS |
The financial statements were approved by the Board of Directors and authorised for issue on |
MLS OPERATIONS LIMITED (REGISTERED NUMBER: 10523704) |
STATEMENT OF CHANGES IN EQUITY |
FOR THE YEAR ENDED 31 DECEMBER 2023 |
Called up |
share | Retained | Total |
capital | earnings | equity |
£ | £ | £ |
Balance at 1 January 2022 |
Changes in equity |
Dividends | - | ( |
) | ( |
) |
Total comprehensive income | - |
Balance at 31 December 2022 |
Changes in equity |
Dividends | - | ( |
) | ( |
) |
Total comprehensive income | - |
Balance at 31 December 2023 |
MLS OPERATIONS LIMITED (REGISTERED NUMBER: 10523704) |
CASH FLOW STATEMENT |
FOR THE YEAR ENDED 31 DECEMBER 2023 |
2023 | 2022 |
Notes | £ | £ |
Cash flows from operating activities |
Cash generated from operations | 23 |
Interest paid | ( |
) | ( |
) |
Tax paid | ( |
) |
Net cash from operating activities |
Cash flows from investing activities |
Purchase of intangible fixed assets | ( |
) | ( |
) |
Purchase of tangible fixed assets | ( |
) | ( |
) |
Purchase of fixed asset investments | (5,000 | ) | - |
Net cash from investing activities | ( |
) | ( |
) |
Cash flows from financing activities |
New loans in year |
Loan repayments in year | ( |
) | ( |
) |
Equity dividends paid | ( |
) | ( |
) |
Net cash from financing activities | ( |
) |
Increase/(decrease) in cash and cash equivalents | ( |
) |
Cash and cash equivalents at beginning of year |
24 |
3,460,678 |
Cash and cash equivalents at end of year |
24 |
4,598,504 |
3,186,655 |
MLS OPERATIONS LIMITED (REGISTERED NUMBER: 10523704) |
NOTES TO THE FINANCIAL STATEMENTS |
FOR THE YEAR ENDED 31 DECEMBER 2023 |
1. | STATUTORY INFORMATION |
MLS Operations Limited is a |
The presentation currency of the financial statements is the Pound Sterling (£). |
2. | STATEMENT OF COMPLIANCE |
3. | ACCOUNTING POLICIES |
Basis of preparing the financial statements and going concern |
The Company continued to generate significant operating cash flows and continued to increase operations year on year. Despite this, the balance sheet as at 31 December 2023 shows a net current liability position of £4,011,914 (2022: £2,164,542). |
The Company continues to meet its day to day working capital requirements through operating cash flows and finances all acquisitions and significant refurbishments via a combination of bank finance and working capital. |
Having considered all the relevant facts the directors consider it is appropriate to prepare the financial statements on a going concern basis. |
Significant judgements and estimates |
Estimates and judgements are continually evaluated and are based on historical experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances. |
a) Critical judgements in applying the entity's accounting policies |
There are no specific judgements, apart from those involving estimates as detailed below, that management has made in the process of applying the entity's accounting policies that have a significant effect on the amounts recognised in the financial statements. |
b) Critical accounting estimates and assumptions |
(i) Useful economic lives of tangible assets |
The annual depreciation charge for tangible assets is sensitive to changes in the estimated useful lives and residual values of the assets. The useful economic lives and residual values are re-assessed annually. They are amended when necessary to reflect current estimates based on technological advancement, future investments, economic utilisation and the physical condition of the assets. |
(ii) Useful economic live of intangible assets |
Intangible assets are amortised over their useful economic lives and are assessed annually for indications of impairment. |
iii) Treatment of significant capital projects |
The allocation of store refurbishment expenditure between capital and revenue is an area that requires judgement on the part of management. Costs are allocated in line with the asset recognition contained within FRS102 and on the basis of all available evidence as to their nature. The management uses professional advisors to assist them with this process. |
MLS OPERATIONS LIMITED (REGISTERED NUMBER: 10523704) |
NOTES TO THE FINANCIAL STATEMENTS - continued |
FOR THE YEAR ENDED 31 DECEMBER 2023 |
3. | ACCOUNTING POLICIES - continued |
Revenue recognition |
Revenue is measured at the fair value of the consideration received or receivable and represents the amount receivable for goods supplied, net of returns, discounts and value added taxes. |
Sales of goods are recognised on sale to the customer, which is considered to be the point of sale and when the significant risks and rewards of the goods have been passed to the customer. |
Franchise rights and franchise fees |
Franchise rights and fees are amortised over the period of the franchise agreement. |
Tangible fixed assets |
Tangible Fixed Assets are stated at cost less depreciation. |
Depreciation is provided at the following annual rates in order to write off each asset over its estimated useful life. |
Property Improvements | Straight line over 7-10 years |
Plant and Equipment | Straight line over 7-10 years |
Fixtures and Fitting | Straight line over 5 years |
Computer Equipment | Straight line over 4 years |
Motor Vehicles | Straight line over 4 years |
Stocks |
Stock is stated at the lower of cost and selling price less costs to complete and sell, after making due allowance for obsolete and slow moving items. Stocks are recognized as an expense in the period in which the related revenue is recognized. |
Cost is determined on the first-in, first-out (FIFO) method. Cost includes the purchase price, including taxes and duties, transport and handling directly attributable to bringing the stock to its present location and condition. |
Financial instruments |
The Company has chosen to adopt Sections 11 and 12 of FRS102 in respect of financial instruments. Basic financial instruments are initially recognised at transaction value and subsequently carried at this value less any provision for impairment. |
Cash and cash equivalents |
Cash and cash equivalents in the balance sheet represent cash at bank and in hand. |
Short-term debtors and creditors |
Debtors and creditors with no stated interest rate and receivable or payable within one year are recorded at transaction price. Any losses arising from impairment are recognised in profit or loss under operating expenses. |
The carrying value of all short-term financial assets and liabilities are measured at amortised cost. |
Taxation |
Taxation for the year comprises current and deferred tax. Tax is recognised in the Statement of Comprehensive Income, except to the extent that it relates to items recognised in other comprehensive income or directly in equity. |
Current or deferred taxation assets and liabilities are not discounted. |
Current tax is recognised at the amount of tax payable using the tax rates and laws that have been enacted or substantively enacted by the balance sheet date. |
MLS OPERATIONS LIMITED (REGISTERED NUMBER: 10523704) |
NOTES TO THE FINANCIAL STATEMENTS - continued |
FOR THE YEAR ENDED 31 DECEMBER 2023 |
3. | ACCOUNTING POLICIES - continued |
Deferred tax |
Deferred tax is recognised in respect of all timing differences that have originated but not reversed at the balance sheet date. |
Timing differences arise from the inclusion of income and expenses in tax assessments in periods different from those in which they are recognised in financial statements. Deferred tax is measured using tax rates and laws that have been enacted or substantively enacted by the year end and that are expected to apply to the reversal of the timing difference. |
Unrelieved tax losses and other deferred tax assets are recognised only to the extent that it is probable that they will be recovered against the reversal of deferred tax liabilities or other future taxable profits. |
Pension costs and other post-retirement benefits |
(i) Holiday pay |
Holiday pay entitlements (where material) are recognised as an expense in the period in which the service is received. |
(ii) Pension Scheme |
The company operates a defined contribution pension scheme for its employees. The contributions are recognised as an expense when they are due. Amounts not paid are shown as a creditor on the balance sheet. The assets of the scheme are held separately from the company in independently administered funds. |
Hire purchase and leasing commitments |
The Company's restaurant premises are leased from the franchisor under a non-cancellable lease with an expiry term of more than five years. The rental payments are calculated on a monthly basis and are substantially based on annual sales income generated. |
Assets obtained under hire purchase contracts or finance leases are capitalised on the balance sheet. |
Those held under hire purchase contracts are depreciated over their estimated useful lives. Those held under finance leases are depreciated over their estimated useful lives or lease term, whichever is shorter. |
The interest element of these obligations is charged to the Profit and Loss over the relevant period. the capital element of future payments is treated as a liability. |
Borrowing costs |
All borrowing costs are recognised in the Profit and Loss Account in the period in which they are incurred. |
Provisions for liabilities |
Provisions are made where an event has taken place that gives the company a legal or constructive obligation that probably requires settlement by a transfer of economic benefit, and a reliable estimate can be made of the amount of the obligation. |
Provisions are charged as an expense to the Profit and Loss Account in the year that the company becomes aware of the obligation, and are measured at the best estimate at the Balance Sheet date of the expenditure required to settle the obligation, taking into account relevant risks and uncertainties. |
When payments are eventually made, they are charged to the provision carried in the Balance Sheet. |
MLS OPERATIONS LIMITED (REGISTERED NUMBER: 10523704) |
NOTES TO THE FINANCIAL STATEMENTS - continued |
FOR THE YEAR ENDED 31 DECEMBER 2023 |
4. | EMPLOYEES AND DIRECTORS |
2023 | 2022 |
£ | £ |
Wages and salaries |
Social security costs |
Other pension costs |
The average number of employees during the year was as follows: |
2023 | 2022 |
Restaurant team | 1,620 | 1,413 |
Management | 59 | 48 |
2023 | 2022 |
£ | £ |
Directors' remuneration |
The Directors are considered to be the key management for the purposes of disclosure under FRS102. |
5. | OPERATING PROFIT |
The operating profit is stated after charging: |
2023 | 2022 |
£ | £ |
Depreciation - owned assets |
Franchise rights amortisation |
Franchise fees amortisation |
Audit fees |
6. | INTEREST PAYABLE AND SIMILAR EXPENSES |
2023 | 2022 |
£ | £ |
Bank interest |
7. | TAXATION |
Analysis of the tax charge |
The tax charge on the profit for the year was as follows: |
2023 | 2022 |
£ | £ |
Deferred tax |
Tax on profit |
UK corporation tax has been charged at 23.50% (2022 - 19%). |
MLS OPERATIONS LIMITED (REGISTERED NUMBER: 10523704) |
NOTES TO THE FINANCIAL STATEMENTS - continued |
FOR THE YEAR ENDED 31 DECEMBER 2023 |
7. | TAXATION - continued |
Reconciliation of total tax charge included in profit and loss |
The tax assessed for the year is higher than the standard rate of corporation tax in the UK. The difference is explained below: |
2023 | 2022 |
£ | £ |
Profit before tax |
Profit multiplied by the standard rate of corporation tax in the UK of |
Effects of: |
Expenses not deductible for tax purposes | ( |
) | ( |
) |
Capital allowances in excess of depreciation | ( |
) | ( |
) |
Utilisation of tax losses | ( |
) |
Deferred tax | 393,112 | 181,810 |
Total tax charge | 393,111 | 181,810 |
The Company has corporation tax losses of £1,054,557 (2022: £1,520,939) to carry forward against future trading profits. Deferred tax asset on these losses of £263,640 (2022: £380,082) has been recognised in these accounts as it is recoverable in the short term. |
8. | DIVIDENDS |
2023 | 2022 |
£ | £ |
Ordinary shares of £1 each |
Interim |
9. | INTANGIBLE FIXED ASSETS |
Franchise | Franchise |
rights | fees | Totals |
£ | £ | £ |
COST |
At 1 January 2023 |
Additions |
At 31 December 2023 |
AMORTISATION |
At 1 January 2023 |
Amortisation for year |
At 31 December 2023 |
NET BOOK VALUE |
At 31 December 2023 |
At 31 December 2022 |
MLS OPERATIONS LIMITED (REGISTERED NUMBER: 10523704) |
NOTES TO THE FINANCIAL STATEMENTS - continued |
FOR THE YEAR ENDED 31 DECEMBER 2023 |
10. | TANGIBLE FIXED ASSETS |
Plant and | Motor | Computer |
equipment | vehicles | equipment | Totals |
£ | £ | £ | £ |
COST |
At 1 January 2023 |
Additions |
At 31 December 2023 |
DEPRECIATION |
At 1 January 2023 |
Charge for year |
At 31 December 2023 |
NET BOOK VALUE |
At 31 December 2023 |
At 31 December 2022 |
11. | FIXED ASSET INVESTMENTS |
Unlisted |
investments |
£ |
COST |
At 1 January 2023 |
Additions |
At 31 December 2023 |
NET BOOK VALUE |
At 31 December 2023 |
At 31 December 2022 |
12. | STOCKS |
2023 | 2022 |
£ | £ |
Stocks |
13. | DEBTORS: AMOUNTS FALLING DUE WITHIN ONE YEAR |
2023 | 2022 |
£ | £ |
Trade debtors |
Other debtors |
Prepayments and accrued income |
Balances owed at the year end from third party delivery partners have been classified as trade debtors. |
MLS OPERATIONS LIMITED (REGISTERED NUMBER: 10523704) |
NOTES TO THE FINANCIAL STATEMENTS - continued |
FOR THE YEAR ENDED 31 DECEMBER 2023 |
14. | CREDITORS: AMOUNTS FALLING DUE WITHIN ONE YEAR |
2023 | 2022 |
£ | £ |
Bank loans and overdrafts (see note 16) |
Hire purchase contracts (see note 17) |
Trade creditors |
Social security and other taxes |
Other creditors |
Directors' current accounts | 230,900 | 230,900 |
Accrued expenses |
15. | CREDITORS: AMOUNTS FALLING DUE AFTER MORE THAN ONE YEAR |
2023 | 2022 |
£ | £ |
Bank loans (see note 16) |
Hire purchase contracts (see note 17) |
16. | LOANS |
An analysis of the maturity of loans is given below: |
2023 | 2022 |
£ | £ |
Amounts falling due within one year or on demand: |
Bank loans - less than 1 year |
Amounts falling due between one and two years: |
Bank loans |
Amounts falling due between two and five years: |
Bank loans - 2-5 years |
Amounts falling due in more than five years: |
Repayable by instalments |
Bank loans >5 years payable |
by instalments | 1,448,126 | 729,258 |
1,448,126 | 729,258 |
The bank loans are unsecured for a total term of 7 years with interest charged at 1.4 - 1.6% above Bank of England Base Rate. |
MLS OPERATIONS LIMITED (REGISTERED NUMBER: 10523704) |
NOTES TO THE FINANCIAL STATEMENTS - continued |
FOR THE YEAR ENDED 31 DECEMBER 2023 |
17. | LEASING AGREEMENTS |
Minimum lease payments fall due as follows: |
Hire purchase | contracts |
2023 | 2022 |
£ | £ |
Net obligations repayable: |
Within one year |
Between one and five years |
Non-cancellable | operating leases |
2023 | 2022 |
£ | £ |
Within one year |
Between one and five years |
In more than five years |
The above amounts relate to annual commitments to pay a base rent for leased trading premises. |
18. | PROVISIONS FOR LIABILITIES |
2023 | 2022 |
£ | £ |
Deferred tax |
Tax losses carried forward | ( |
) | ( |
) |
Accelerated capital allowances | 1,488,972 | 1,212,303 |
1,225,332 | 832,221 |
Deferred |
tax |
£ |
Balance at 1 January 2023 |
Provided during year |
Balance at 31 December 2023 |
19. | CALLED UP SHARE CAPITAL |
Allotted, issued and fully paid: |
Number: | Class: | Nominal | 2023 | 2022 |
value: | £ | £ |
Ordinary | £1 | 100 | 100 |
MLS OPERATIONS LIMITED (REGISTERED NUMBER: 10523704) |
NOTES TO THE FINANCIAL STATEMENTS - continued |
FOR THE YEAR ENDED 31 DECEMBER 2023 |
20. | RESERVES |
Retained |
earnings |
£ |
At 1 January 2023 |
Profit for the year |
Dividends | ( |
) |
At 31 December 2023 |
21. | RELATED PARTY DISCLOSURES |
During the year, total dividends of £99,000 (2022 - £108,000) were paid to the directors . |
At the year end the company owed a Director £230,900 (2022 - £230,900). |
The balance is unsecured, interest free and repayable on demand. |
22. | ULTIMATE CONTROLLING PARTY |
The controlling party is M Schweizer. |
23. | RECONCILIATION OF PROFIT BEFORE TAXATION TO CASH GENERATED FROM OPERATIONS |
2023 | 2022 |
£ | £ |
Profit before taxation |
Depreciation charges |
Finance costs | 370,816 | 153,645 |
2,972,683 | 1,835,925 |
Increase in stocks | ( |
) | ( |
) |
Decrease/(increase) in trade and other debtors | ( |
) |
Increase in trade and other creditors |
Cash generated from operations |
24. | CASH AND CASH EQUIVALENTS |
The amounts disclosed on the Cash Flow Statement in respect of cash and cash equivalents are in respect of these Balance Sheet amounts: |
Year ended 31 December 2023 |
31.12.23 | 1.1.23 |
£ | £ |
Cash and cash equivalents | 4,598,504 | 3,186,655 |
Year ended 31 December 2022 |
31.12.22 | 1.1.22 |
£ | £ |
Cash and cash equivalents | 3,186,655 | 3,460,678 |
MLS OPERATIONS LIMITED (REGISTERED NUMBER: 10523704) |
NOTES TO THE FINANCIAL STATEMENTS - continued |
FOR THE YEAR ENDED 31 DECEMBER 2023 |
25. | ANALYSIS OF CHANGES IN NET DEBT |
At 1.1.23 | Cash flow | At 31.12.23 |
£ | £ | £ |
Net cash |
Cash at bank | 3,186,655 | 1,411,849 | 4,598,504 |
3,186,655 | 4,598,504 |
Debt |
Finance leases | - | (42,793 | ) | (42,793 | ) |
Debts falling due within 1 year | (1,155,855 | ) | (434,386 | ) | (1,590,241 | ) |
Debts falling due after 1 year | (4,512,919 | ) | (1,656,334 | ) | (6,169,253 | ) |
(5,668,774 | ) | (2,133,513 | ) | (7,802,287 | ) |
Total | (2,482,119 | ) | (721,664 | ) | (3,203,783 | ) |