SHORYU_NEW_OXFORD_STREET_ - Accounts
SHORYU_NEW_OXFORD_STREET_ - Accounts
Shoryu New Oxford Street Limited is a private company limited by shares incorporated in England and Wales. The registered office is Unit B, Premier Park Road, Park Royal, London, United Kingdom, NW10 7NZ.
The financial statements are prepared in sterling, which is the functional currency of the company. Monetary amounts in these financial statements are rounded to the nearest £1.
The financial statements have been prepared on a going concern basis. The directors have a reasonable expectation that the company will continue in operational existence for the foreseeable future. However, the directors are aware of certain material uncertainties which may cause doubt on the company's ability to continue as a going concern.
The company has net current liabilities of £637,752 (2018: £572,517 and an overall net liabilities position of £119,097 (2018: £4,481 net assets position) and has made a net loss of £123,578 (2018: net loss £78,121).
Included in the amounts falling due within one year is £654,598 due to a fellow subsidiary company which is also wholly owned by the parent company. The fellow subsidiary company has provided assurance that it will not seek repayment of the amount owed until the company is in a position to repay the liability as this is in the best interest of the group.
Also included in the amounts falling due within one year is a debt of £72,326 owed to a related party under common control which is a key broker for the company. The directors are confident they are able to repay the trade debt and in future if cash flow is tight they could obtain support from group companies and could purchase stocks directly from external suppliers and save on the mark up charged by the related party. They are also confident they could transfer the kitchen and work force across from the related party to the company if need arises.
The company reported in the management accounts a draft EBITDA loss for the 12 months to December 2020 of £171,289 and a net loss before tax of £229,984. The management figures from January 2021 onwards noted a decline in sales against the pre-pandemic level but recovering since the outbreak of COVID-19.
Despite the success in the government’s 4 step plan so far (with step 4 under review) and the high uptake of the vaccination program, it is uncertain when the group will return to profitability from its operations. In order to address its financing requirements, the directors have put measures in place to manage the cash flows by negotiating payment terms with landlords and major suppliers and claiming support from the government where available.
Shoryu New Oxford Street Limited is a subsidiary of Shoryu Holdings Limited. The group has prepared a cash flow forecast until December 2022, under the current uncertain conditions based on the key assumption that the restaurants will remain open for the foreseeable future. The forecasts incorporate mitigating action undertaken to reduce the group costs. Measures include rent concession negotiations with landlords, deferment and/or instalment payment arrangements with asset finance providers, creditors and HMRC, accessing government's job retention scheme, management team pay cuts, accessing bank finance by way of Coronavirus Business Interruption Loan (CBILS) and Recovery Loan Scheme, participating in government Eat Out To Help Out Scheme, coronavirus business support grants, and business rates relief. In addition, Shoryu launched DIY meal kits and five dark kitchens to serve its customers working from home which have had a significant contribution towards mitigating its losses.
Additionally, the parent company has been able to secure a 5 year bank loan amounting to £1,000,000 as a result of government support which is interest free with no repayments for a year until April 2021. Furthermore, the parent company has been able to secure a further loan with a term of 5 years for a principal sum of £750,000 from the bank under the government recovery loan scheme which is interest free with no repayments for 6 months until November 2021.
The long term survival of the group as a whole and therefore the company is dependent on future government announcements, decisions by landlords and regaining customer confidence. In making the going concern assessment the directors are of the opinion that the parent company and most of the fellow subsidiary companies have a strong balance sheet and cash position and therefore will be able to support the company should the situation get worse. However, a material uncertainty regarding going concern does exist given the factors mentioned above.
The directors are confident regarding the group's and therefore the company’s long-term prospects and profitability. It is however difficult to estimate how the COVID-19 outbreak will impact the company’s trading and for how long. The directors consider this as the key uncertainty over which they have no control.
In the event the restaurants were to close in the future due to pandemic related reasons, all of the refinancing measures as noted were not agreed or the short term government support for employee costs and tax payment deferrals were not available as forecast, then the company would need to seek financial support from its parent company.
Given the associated uncertainty within the parent company forecast a material uncertainty exists that may cast a significant doubt on the company’s ability to continue as a going concern. The financial statements do not include the adjustments that would result if the company was unable to continue
as a going concern.
Basic financial assets, which include debtors and cash and bank balances, are initially measured at transaction price including transaction costs and are subsequently carried at amortised cost using the effective interest method unless the arrangement constitutes a financing transaction, where the transaction is measured at the present value of the future receipts discounted at a market rate of interest. Financial assets classified as receivable within one year are not amortised.
Basic financial liabilities, including creditors, bank loans, loans from fellow group companies and preference shares that are classified as debt, are initially recognised at transaction price unless the arrangement constitutes a financing transaction, where the debt instrument is measured at the present value of the future payments discounted at a market rate of interest. Financial liabilities classified as payable within one year are not amortised.
Debt instruments are subsequently carried at amortised cost, using the effective interest rate method.
Trade creditors are obligations to pay for goods or services that have been acquired in the ordinary course of business from suppliers. Amounts payable are classified as current liabilities if payment is due within one year or less. If not, they are presented as non-current liabilities. Trade creditors are recognised initially at transaction price and subsequently measured at amortised cost using the effective interest method.
In the application of the company’s accounting policies, the directors are required to make judgements, estimates and assumptions about the carrying amount of assets and liabilities that are not readily apparent from other sources. The estimates and associated assumptions are based on historical experience and other factors that are considered to be relevant. Actual results may differ from these estimates.
The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised where the revision affects only that period, or in the period of the revision and future periods where the revision affects both current and future periods.
The following judgements (apart from those involving estimates) have had the most significant effect on amounts recognised in the financial statements.
In light of the COVID-19 pandemic, the company has considered whether any adjustments are required to reported amounts in the financial statements as indicated in note 23.
As indicated in note 2 it is the directors' assessment that the company continues to be a going concern however a material uncertainty does exist as a result of the impact of the future operations due to the outbreak of COVID-19.
Accordingly, the assets and liabilities have been valued on the basis that the company will continue in business.
If this presumption is proven to be mistaken, the carrying value of assets and liabilities would need to be reappraised to reflect the impact of cessation.
In assessing whether there have been any indicators of impairment of the company's asset, the directors have considered both external and internal sources of information such as market conditions and experience of recoverability. There have been no material indicators of impairments identified during the current financial year.
The average monthly number of persons (including directors) employed by the company during the year was:
Included within the net book value of land and buildings above is £438,206 (2018: £474,716) in respect of short leasehold land and buildings.
As the income statement has been omitted from the filing copy of the financial statements, the following information in relation to the audit report on the statutory financial statements is provided in accordance with s444(5B) of the Companies Act 2006:
The auditor's report was unqualified.
At the reporting end date the company had outstanding commitments for future minimum lease payments under non-cancellable operating leases, as follows:
Since 23 March 2020, the COVID-19 pandemic has materially and adversely affected the hospitality sector due to the multiple lockdowns and restrictions imposed by the government, social distancing, global travel restrictions and the decline in tourists. As a result, the group and therefore the company has been significantly impacted as customer demand has dropped and therefore may have a significant impact on the overall operating results.
Government and banks have responded with monetary and fiscal interventions to stabilise economic conditions.
The company operates in the hospitality sector and therefore the impact on its financial viability is material and may have a significant impact on the operating results.
The directors have determined that these events are non-adjusting subsequent events. Accordingly, the financial position and results of operations as of and for the year ended 31 December 2019 have not been adjusted to reflect their impact. The duration and impact of the COVID-19 pandemic as well as the effectiveness of government and landlord responses remains unclear at this time. It is not possible to reliably estimate the duration and severity of these consequences as well as their impact on the financial position and results of the company for future periods.
The directors conclusions on the company being a going concern are set out in the accounting policies (note 1.2).
The company's parent and ultimate parent is Shoryu Holdings Limited, incorporated in United Kingdom.
The parent of the largest group in which these financial statements are consolidated is Shoryu Holdings Limited, incorporated in United Kingdom and the consolidated financial statements can be available from Companies House using the company's registration number 08251749.