Registered number: 11461786
RITUAL TECHNOLOGIES UK LTD
FINANCIAL STATEMENTS
INFORMATION FOR FILING WITH THE REGISTRAR
FOR THE YEAR ENDED 31 DECEMBER 2023
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RITUAL TECHNOLOGIES UK LTD
REGISTERED NUMBER: 11461786
STATEMENT OF FINANCIAL POSITION
AS AT 31 DECEMBER 2023
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Debtors: amounts falling due within one year
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Creditors: amounts falling due within one year
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Total assets less current liabilities
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The financial statements have been prepared in accordance with the provisions applicable to companies subject to the small companies regime and in accordance with the provisions of FRS 102 Section 1A - small entities.
The financial statements have been delivered in accordance with the provisions applicable to companies subject to the small companies regime.
The company has opted not to file the statement of comprehensive income in accordance with provisions applicable to companies subject to the small companies' regime.
The financial statements were approved and authorised for issue by the board and were signed on its behalf on 25 September 2024.
The notes on pages 3 to 9 form part of these financial statements.
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RITUAL TECHNOLOGIES UK LTD
STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 DECEMBER 2023
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The notes on pages 3 to 9 form part of these financial statements.
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RITUAL TECHNOLOGIES UK LTD
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
Ritual Technologies UK Limited is a private company limited by shares incorporated in England and Wales. The registered office and business address is 5 New Street Square, London, United Kingdom, EC4A 3TW.
2.Accounting policies
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Basis of preparation of financial statements
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The financial statements have been prepared under the historical cost convention unless otherwise specified within these accounting policies and in accordance with FRS 102 'The Financial Reporting Standard applicable in the UK and the Republic of Ireland' and the requirements of the Companies Act 2006. The disclosure requirements of Section 1A of FRS 102 have been applied other than where additional disclosure is required to show a true and fair view.
The preparation of financial statements in compliance with FRS 102 requires the use of certain critical accounting estimates. It also requires management to exercise judgment in applying the company's accounting policies (see note 3).
The following principal accounting policies have been applied:
The accompanying financial statements have been prepared on a going concern basis. The company has experienced losses since inception. For the year ended 31 December 2023, the company generated a comprehensive profit of £656,810 (2022: £597,013) and has net liabilities of £6,742,410 (2022: £7,399,220).
The company has implemented a number of mitigation strategies to address the impacts of declining revenues and to further manage the future cash flows. The company generates revenue, but additional financing will be required before the company expects to generate free cash flow. As at the date of these financial statements, the parent company's cash balance is sufficient to sustain the company's operations for at least another 12 months. The parent company intends to continue to financially support the company until it is able to generate free cash flow.
The accompanying financial statements do not reflect adjustments to the carrying values of assets and liabilities and the reported expenses and statement of financial position classifications that would be necessary if the going concern assumption were inappropriate, and these adjustments would be material.
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Foreign currency translation
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The company's functional and presentational currency is GBP.
Transactions in currencies other than the functional currency ("foreign currencies") are recognised at the rates of exchange prevailing at the dates of the transactions. At the end of each reporting period, monetary items denominated in foreign currencies are retranslated at the rates prevailing at that date. Exchange differences on monetary items are recognised in profit or loss in the year in which they arise.
Non-monetary items carried at fair value that are denominated in foreign currencies are retranslated at the rates prevailing at the date when the fair value was determined. Non-monetary items that are measured in terms of historical cost in a foreign currency are not retranslated.
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RITUAL TECHNOLOGIES UK LTD
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
2.Accounting policies (continued)
Revenue is calculated by determining Fees, which consists of (i) commissions for Restaurant (merchant) orders placed by consumers via the Ritual platform, and (ii) online payment services provided to Restaurants less sales incentives and credits.
Revenues are measured based on consideration specified in contracts or based on customary business practices. Revenue is recognised net of any taxes collected from customers which are subsequently remitted to governmental authorities.
Commissions are typically a percentage fee charged to Restaurants on the value of each order transaction processed through the Ritual platform. Commission revenue is recognised at the point in time the order is processed by the Restaurant, which is when the company’s performance obligation is completed.
Online payment services represent fees charged for processing online payments for Restaurants. Revenue for payment services are recognised at the time the payment transaction is processed. The company has a subscription service called Ritual One whereby restaurants can accept digital orders from their own website and social media accounts. The company recognises subscription fee revenue from its stand-ready obligation to provide access to the platform over the term of the agreement from its restaurant customers provided that collectability is probable, or on a cash collected basis.
As fulfilment of the consumer’s order remains the responsibility of, and is under the control of the Restaurant, the gross value of the order transaction is not recognised as revenue, only the commission on which the company is entitled from our Restaurant customer.
The company is the principal in the transaction with respect to online payment processing because Ritual controls the respective services. As a result, costs incurred by the company for processing payment transactions are included as expenses in the Statement of Comprehensive Income.
The company provides and funds promotional incentives to consumers to encourage the use of the Ritual platform and the placement of orders at our Restaurant customers. Where these incentive promotions or programs are reasonably knowable to our Restaurant customer, the cost of these incentives is recognised as consideration payable to a customer and generally reduces revenue. These amounts are referred to as ‘Sales Incentives and Credits’.
The company has a loyalty program whereby consumers can earn points based on the value of orders processed via the Ritual platform. Points are redeemed to reduce payments owed to Restaurants on orders placed and are funded by the company. Revenue is allocated to points issuable under this program as they are earned by the consumer based on the fair value of the points, with an offset to the Points Liability. Revenue is recognised as the points are redeemed.
The company generally collects funds and makes payments to the restaurants on a weekly basis.
Interest income is recognised in profit or loss using the effective interest method.
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RITUAL TECHNOLOGIES UK LTD
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
2.Accounting policies (continued)
The company issues stock options and certain other share-based compensation to employees pursuant to a group stock option plan. Stock options and restricted shares are settled with common shares at the parent entity level.
Compensation cost for equity settled awards are measured based on the grant date fair value of the award and recognised, net of estimated forfeitures, on a straight-line basis over the respective vesting period of each tranche of the award. At the end of each reporting period, the company reassesses its estimates of the number of awards that are expected to vest and recognises the impact of the revisions in profit or loss in the current year. Share-based compensation cost is recognised within operating expenses.
Short term debtors are measured at transaction price, less any impairment.
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Cash and cash equivalents
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Cash equivalents include highly liquid investments (term deposits) with maturities of three months or less at the date of purchase that are held for the purpose of meeting short-term cash commitments rather than for investment or other purposes
Short term creditors are measured at the transaction price.
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RITUAL TECHNOLOGIES UK LTD
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
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Judgments in applying accounting policies and key sources of estimation uncertainty
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In the application of the company's accounting policies, which are described in note 2, management is required to make judgments, estimates and assumptions about the carrying amounts of assets and liabilities that are not readily apparent from other sources. The estimates and associated assumptionsare based on historical experience and other factors that are considered to be relevant. Actual results may differ from these estimates.
The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the year in which the estimate is revised if the revision affects only that year or in the year of the revision and future years if the revision affects both current and future years. Areas which require management to make significant judgments and estimates in determining the amounts recognised in the financial statements are as follows:
Revenue recognition
Whether the company is considered to be the principal or an agent in the transaction with its customer depends on an analysis of both the legal form and substance of the agreements between the company, the diner and the restaurant (also referred to as merchant). Such judgments impact the amount of reported revenue and expenses, but do not impact reported assets, liabilities or cash flows. Whether certain promotion incentives are recorded as sales & marketing expenses or as a reduction to revenue depends on judgments as to whether each incentive is ‘reasonably knowable’ to restaurants. These incentives impact the amount of reported revenue and expenses, but do not impact reported assets, liabilities or cash flows.
Presentation of the cost of Ritual funded sales and promotional incentives
The Company offers new and existing users of the Ritual App certain sales and promotional incentives in the form of credits and discounts on orders with the Company's restaurant Merchant and/or Delivery Partner customer ("Customer"). This is particularly true when the Company building brand awareness in recently launched regions. When these sales and incentive programs are 'reasonably knowable' to the Customer, for revenue recognition purposes there is an implied promise in Ritual's revenue
arrangements with the Customer that Ritual will fund incentives on the Customer's behalf to the Consumers. The cost of these promotional incentives is therefore accounted for as consideration payable to a Customer and generally recognized as a reduction from the fees Ritual earns from Customers when presenting revenue from its services.
The assessment of whether there is an implied promise to its Customer that Ritual will fund incentives to consumers on the Customer's behalf requires significant judgment. When making this assessment, the Company evaluates which promotions and programs are 'reasonably knowable' to its Customers. The evaluation considers factors including contractual requirements and communications with the Customer and whether the incentive benefit is visible via the Ritual application, website, e-mails, or other forms of communications that are accessible by the Customer such that they are reasonably aware that consumers are receiving incentive benefits on order purchases.
When the incentives are offered by Ritual to consumers without any implied or contractual promise by Ritual to the Customer to do so, the Company views them as akin to marketing coupons used to drive consumer activation and engagement on the Ritual application. When these types of incentives are redeemed by the consumer, they reduce the payment made by the consumer for the order. The amount of these incentives which Ritual funds is recognized as a selling and marketing expense.
These incentives impact the amount of reported revenue and expenses, but do not impact reported assets, liabilities, net loss or cash flows.
Effective April 1, 2023 the Company commenced charging user fees to all end-user Consumers of the Ritual App and therefore all promotional incentives thereafter are accounted for as consideration payable to a Customer and recognized as a reduction in revenue.
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RITUAL TECHNOLOGIES UK LTD
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
3.Judgments in applying accounting policies (continued)
Valuation of equity-settled share-based payments
The valuation of share options granted to employees under the employee share option plan, involves key estimates, such as volatility, forfeiture rates, estimated lives and market rates. Management believes that the estimates used are appropriate in determining the fair value of such equity instruments.
Customers loyalty reward points
The Company value spoints issuable under its loyalty programs based on eligibility schedules, breakage estimates, and the redemption credit value. The value is currently $1 for every 1,000 points earned. The Company currently factors in breakage as it occurs and will factor in breakage estimates as it gains experience or can otherwise reliably estimate an expected brekage amount.
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The average monthly number of employees, including directors, during the year was 2 (2022 - 2).
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RITUAL TECHNOLOGIES UK LTD
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
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Creditors: Amounts falling due within one year
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Amounts owed to group undertakings
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Other taxation and social security
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Accruals and deferred income
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Included in accruals and deferred income is an amount of £8,645 (2022: £519,953) relating to points liability.
The Company paused its contractual expiration of Points at the onset of the Covid-19 pandemic in early 2020. Therefore, no Points expired in 2021 or 2022. In May 2023, the Company recommenced the contractual expiry of Points in accordance with its contracts with Consumers and therefore, a large number of Points expired in 2023 - a total of £513,279. The offset to the derecognition of the Points liability was recorded as a reduction of sales & marketing expense.
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Allotted, called up and fully paid
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1,001,000 (2022 - 1,001,000) Ordinary shares of £1 each shares of £1.00 each
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RITUAL TECHNOLOGIES UK LTD
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
Other reserves
The Company has an share option plan which allows for the grant of options and other securities, to employees, officers, directors or consultants. Each share option converts into one common share of the Company on exercise. No amounts are paid or payable by the recipient on receipt of the option. The options carry neither rights to dividends nor voting rights. Options may be exercised at any time from the date of vesting to the date of their expiry.
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Related party transactions
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During the year the company was charged a business service fee of £46,612 (2022: £184,446) by its parent company.
At the reporting date the amount owed (to)/ by its parent company and other companies within the group are as follows. These amounts are unsecured, interest free and due on demand
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Ritual Technologies (U.S.) Inc
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The parent undertaking of the smallest and largest group of which the company is a member and for which group financial statements are prepared is Ritual Technologies Inc, whose registered office is at 488 Wellington Street W, Suite 304, Toronto, Ontario, M5V 1E9, Canada.
The auditors' report on the financial statements for the year ended 31 December 2023 was unqualified.
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In their report, the auditors emphasised the following matter without qualifying their report:
We draw attention to note 2.2 in the financial statements, which indicates the Directors' consideration on going concern. In particular, as stated in note 2.2, the company requires funds to meet its obligations which are due within 12 months from the signing of these financial statements and the continued financial support from its parent undertaking is not guaranteed. As stated in note 2.2, these events or conditions indicate that a material uncertainty exists that may cast significant doubt on the company's ability to continue as a going concern. Our opinion is not modified in respect of this matter.
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The audit report was signed on 25 September 2024 by Hetal Mistry (senior statutory auditor) on behalf of Nyman Libson Paul LLP.
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