The directors present the strategic report for the year ended 30 April 2023.
Generate Topco Limited (“the Group”) is the ultimate parent company of the Boxpark business through its ownership of 100% of the share capital of Boxpark Limited.
The Group develops and manages food, beverage, retail, and leisure units through Boxpark Limited and its subsidiaries Boxpark Croydon Limited and Boxpark Trading Limited, trading out of three locations in Shoreditch, Croydon and Wembley. Boxpark Limited provides the management and head office function to the group.
The Group also includes a holding company for its investment in BPQW LLP, a business which develops and manages food, beverage, and leisure units at Boxpark Wembley. This is a 50% joint venture with an unconnected third party. The Group has a strong proven track record of economic regeneration in areas where it has established sites and maintains regular dialogue with local authorities, developers, and other similar stakeholders in redevelopment locations. Boxpark brings communities together by providing the best street food, drinks and entertainment under one roof.
With a pipeline of sites and Agreements for Lease agreed, the Group plans to open an average of 2-3 new sites per annum over the next five years in London and other major UK cities. With Boxpark Liverpool and Boxhall City (in London) set to open in first, the Group has also announced its plans to open Boxhall in Bristol and another Boxpark in Birmingham. The Group’s management is in active discussions on several sites throughout the UK and is confident of securing further sites for 2024/25 openings and beyond. The group is frequently asked to look at shorter tenures and has a specific product designed for this market opportunity.
Business Review
Generate Topco Limited was incorporated on 26th July 2021 and purchased Boxpark Limited and its subsidiaries in September 2021. The Group’s year end synchronizes with the original year end (April) of Boxpark Limited and its subsidiaries. We believe that the report and accounts of Boxpark Limited give a better overview of Boxpark’s activities given these accounts prior year comparatives are on a full year basis. For greater clarity on business performance the Boxpark Limited accounts included more commentary on performance.
One of the Group’s competitive advantages is its focus on events, both large and small, to drive footfall to its sites, with the Group hosting c.600 events per site each year, almost entirely arranged by the Group’s own team. High profile events are partly funded by the Group’s supportive drinks supply partners, as well as major brands wishing to partner with these events. One example of this is the brand sponsorship achieved during high profile sports events such as the Men’s World Cup football championships. The Group has also passionately championed female sport, demonstrating this with the Group’s award-winning campaign (# WOMXNWHOPLAY) around the Women’s Euro Football Championships in Summer 2022. This is culminated in the recent Women’s World Cup football championship screenings where the Group attracted 40% more press coverage, and 90% greater potential broadcast reach (1.9bn) than for the previous equivalent men’s competition.
The Group continues to invest heavily in technology to improve the customer experience and drive revenues, as well as to achieve high levels of cyber security and compliance standards. A focus of the Group remains the growth of the Boxpark “Black Card”, which is partly a loyalty reward system for customers spending at sites, but also provides priority access to popular events and exclusive access to the Group’s “Black Card Sessions” featuring upcoming music artists. The Black Card gives the business a substantial amount of information about customer preferences and buying patterns, thus enabling the marketing team to focus on more bespoke customer offerings rather than a less targeted approach to marketing. The Board is pleased that the number of signed up “Black Card” customers has risen by 26% to 1.3m customers in the year to April 2023.
Ahead of the Group’s expansion the Group has continued to invest in people, with the number of people employed by the business rising by 9% during the year. This included a strengthening of the management team during the year, with the recruitment of a Head of People & Culture helping to drive a broadening of welfare, benefits and training for the Group’s team. The Group already had a balance of senior females within the business and this was bolstered by the promotion of Bhavna Hirani as the Group’s first female Finance Director, as well as promotion and recruitment of other females into key roles.
In terms of a further strengthening of the Board, the Group announced that Paul Thandi has been appointed Non-Executive Chairman from 1st September 2023, who is also Chairman of Student Energy Group and Non-Executive
Director of Metrobank. Having been the CEO of the NEC Group for the past sixteen years, Paul will also step into the position of Chairman of the NEC Group from September 2023. With a wealth of brand building, destination development and leadership experience, Paul will be focusing on the Group’s expansion as it embarks on its growth strategy across the UK, as well as supporting the senior management team to explore potential new offerings and concepts. John Leslie will stay on as a Non-Executive Director and member of the BOXPARK Board, continuing to chair the Remuneration and Audit committees.
The Group had to manage significant cost inflation and volatility during the year. Volatility was caused because the Group’s utility contracts expired in December 2022, a time when supplier prices were spiking. The Group agilely mitigated this situation, partly through price negotiation but also a c.20% reduction in electricity usage and is now fixed into longer term supply contracts. More generally the Group has had to manage material cost inflation in most aspects of the supply chain.
Considering all stakeholders
The Group embraces its responsibilities under section 172 of the Companies Act 2006 by considering the diverse interests of its stakeholders. Our dedication to employees, customers, suppliers, community, and the environment is woven into the fabric of our decision-making processes and operations. We strive to maintain a balance that promotes long-term success and responsible business conduct while upholding high standards of ethics and fairness among all stakeholders.
We illustrate below how we focus and promote these areas:
Employees
We undertake regular feedback mechanisms, including staff engagement surveys which allow us to assess and address employee concerns and aspirations both at head office and site level staff.
We are dedicated to promoting a diverse and inclusive workplace.
We maintain transparent communication through "Town Hall" sessions to keep employees updated on key business updates, targets, issues, and developments. We also use these sessions as an opportunity to recognise exceptional performance of staff through awards.
Our comprehensive benefits package supports the physical, financial, and mental well-being of our team.
We put the team at the core of our decision-making, with a strong focus on staff retention by investing in leadership training and continuous development.
We have an effective Wellbeing Committee across all sites and head office, who are dedicated to improving the mental, physical, and financial wellbeing of our employees Each member of the committee is equipped with training as a Mental Health First Aider
We undertake a range of training and development initiatives including full leadership training for all of our site management teams and those up and coming leaders within our Head Office. We hold monthly Lunch and Learns which enables our teams to share expertise across the business.
Customers
“Being Special” to the customer is at the heart of everything that Boxpark does. Feedback and reviews with all customers is regularly considered by the management team. Understanding our customer views includes the following actions:
Each “Black Card” member is scanned in when visiting a site and will then receive one email per month on their customer experience, all feedback and scores are circulated to senior and site team management on a weekly and monthly basis – all team members are targeted and appraised based on these scores.
Positive and negative reviews on external review sites are reviewed each week at the Group’s senior management meeting.
An annual survey of our customers is undertaken every year with broad ranging questions helping us to understand our customer and requesting improvement suggestions.
Technology is an important driver of customer experience – not only have we introduced an award-winning “Black Card” loyalty and rewards scheme, we have also enhanced the mobile ordering system which now enables customers to be able to order multi-basket food and drinks from their table from multiple vendors in just one transaction.
Suppliers
Long term partnerships with suppliers and landlords have been built over the last eleven years.
Our food and retail traders are key to the success of Boxpark sites, and building long-term partnerships with the traders is critical to our ongoing success. The business is proud of being the incubator of a large number of successful start-up food and retail businesses. It has a dedicated team to highlight initiatives or concerns which are then discussed each week in senior management meetings.
Quarterly Trader meetings are held at each site for traders to be informed about strategic initiatives and maintain good two-way communication between stakeholders.
Beyond our engagement with traders, Boxpark maintains ongoing discussions with a diverse array of suppliers. This includes our longstanding beverage suppliers and our valued partners in security and cleaning services. Given the multifaceted nature of our business, the Group has a broad range of suppliers and endeavors to maintain long-term relationships in order to maintain consistent, high quality customer experiences.
Community & Environment
Our business is focused on our local communities. Each site holds c.600 events every year, many of which are focused on the local community. In the past year, we have hosted the launch of Croydon’s as The London Borough of Culture as well, raised funds for local charities and hosted local community group events free of charges.
There has been increased focus from the Group on ESG, and has demonstrated this with a consistent achievement of improving our score year on year from the external audit carried out. Each member of the team has an objective on improving our audit scores in this area to ensure that we remain focused on improving this continually.
We recruit our teams mainly from the local community and promote internally where possible, many of our traders are local businesses thus contributing to the local economies.
We focus on environmentally friendly operating procedures such as a focus on reducing energy consumption and energy efficiency improvements.
We support the LGBTQIA+ community and we also are a partner of Croydon PrideFest who collaborated with Club Soda to provide access to music and arts for people with learning disabilities.
We partnered with StartUp Croydon to launch a campaign to give early-stage food entrepreneurs an opportunity to take their street food concept to the next level with a free three-month pop-up kitchen.
We launched an initiative entitled “The Black & Brilliant List 2023” – a campaign to recognize and champion a community of emerging black creators across food fashion, arts & culture, entertainment, sports and music.
Principal Risks and Uncertainties
Economic risk:
Much of the current wider economic risk is related to prevailing weak UK consumer demand. Spending on eating out and leisure activities will continue to be affected by consumer confidence with the increasing cost of living uncertainty in the UK. We have seen this in the reduced capacity in the hospitality market from the industry’s economic pressures faced. Boxpark’s customer base is younger than the sector average and so anything that disproportionately impacts younger people will impact the Group accordingly. Evidenced by trading results, management believes that the affordability of the food and leisure at Boxpark along with consistency of its strong events programme will enable the Group to overcome these pressures, but it remains a possible challenge to the business.
Inflationery cost pressures:
The Group has faced significant cost pressures from high UK inflation in the past year in many aspects of the Group's supply chain. Whilst staff costs pressures are significant, the Group is pleased to have reported low staff churn amongst its salaried staff. With the Group set to double the number of its sites in the next twelve months, the ability to recruit strong site management and staff remains a risk. Whilst the Group has mitigated these cost pressures by careful control of resources, as well as some price rises, the weak consumer environment may make it challenging to pass future costs rises through to the consumer without negatively impacting overall demand.
Construction cost inflation:
The general cost inflation felt in the UK economy has significantly impacted construction labour costs and raw materials. If this continues it represents a risk on returns that can be achieved from new sites. Most of the projects are structured in such a way that the Group can re-asses whether it is still valid to proceed with these
projects, and given the short construction periods this represents a limited risk to the business.
Security of Tenure:
The intention of the Group is to enter into long term leases on new sites, the existing sites all have tenures of less than ten years. The significance of each site to the Group will reduce as the roll-out program progresses.
Financing Risks:
The Group has three sites under development and plans to sign further sites for 2024 in the next six months. Whilst the Group has financing facilities in place, it may need to rely on its shareholders to support expansion if it cannot secure further financing in the short-term due to the unstable market of lending facilities we are seeing.
Future Developments
The Group continues to grow organically through the opening of new sites nationally under the Boxpark and Boxhall brands. Other channels for growth are also being actively considered.
Key Performance Indicators
The directors use a variety of financial key performance indicators to monitor performance, as well as using a number of non-financial measures.
The most important measure is footfall to site as there is a close correlation between food and beverage revenues and customer footfall. Bar revenues are reported to the board on a weekly basis, and food and advertising revenues are reported monthly – the former is derived from access to food tenants’ point-of-sale systems, and acts as an indicator of the sustainability of rental income. The Group has offered food tenants different rent offers, with some being entirely linked to the tenant’s own income. The directors also review site occupancy levels each month, as well as rental collection levels. Analysis is undertaken to see what events or initiatives have been successful in driving footfall and spend per head, enabling management to adapt the customer offering.
On behalf of the board
The directors present their annual report and financial statements for the year ended 30 April 2023.
The results for the year are set out on page 11.
No ordinary dividends were paid. The directors do not recommend payment of a further dividend.
The directors who held office during the year and up to the date of signature of the financial statements were as follows:
The group manages its cash and borrowing requirements in order to maximise interest income and minimise interest expense, whilst ensuring the group has sufficient liquid resources to meet the operating needs of the business.
The group is exposed to fair value interest rate risk on its fixed rate borrowings and cash flow interest rate risk on floating rate deposits, bank overdrafts and loans. The group manages its cash and borrowing requirements centrally in order to ensure the group has sufficient liquid resources to service its debt.
Investments of cash surpluses and borrowings are made through banks and companies which must fulfil credit rating criteria approved by the Board.
All customers who wish to trade on credit terms are subject to credit verification procedures. Trade debtors are monitored on an ongoing basis and provision is made for doubtful debts where necessary.
The directors believe that there are currently no major future developments requiring disclosure other than the items mentioned in the Strategic Report.
The auditor, Carpenter Box, is deemed to be reappointed under section 487(2) of the Companies Act 2006.
This report has been prepared in accordance with the provisions applicable to companies entitled to the medium-sized companies exemption.
We have audited the financial statements of Generate Topco Limited (the 'parent company') and its subsidiaries (the 'group') for the year ended 30 April 2023 which comprise the group statement of comprehensive income, the group balance sheet, the company balance sheet, the group statement of changes in equity, the company statement of changes in equity, the group statement of cash flows and notes to the financial statements, including 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).
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 Auditor's responsibilities for the audit of the financial statements section of our report. We are independent of the group and parent 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 group's and 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.
Other information
The other information comprises the information included in the annual report other than the financial statements and our auditor's 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.
Opinions on other matters prescribed by the Companies Act 2006
In our opinion, based on the work undertaken in the course of our audit:
the information given in the 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 strategic report and the directors' report have been prepared in accordance with applicable legal requirements.
In the light of the knowledge and understanding of the group and the parent company and their environment obtained in the course of the audit, we have not identified material misstatements in the strategic report or the directors' report.
We have nothing to report in respect of the following matters in relation to which the Companies Act 2006 requires us to report to you if, in our opinion:
adequate accounting records have not been kept by the parent company, or returns adequate for our audit have not been received from branches not visited by us; or
the parent company 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.
As explained more fully in the directors' responsibilities statement, 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 is 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 parent 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 parent company or to cease operations, or have no realistic alternative but to do so.
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 auditor's 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 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.
In identifying and assessing risks of material misstatement in respect of irregularities, including fraud and non-compliance with laws and regulations, our procedures included the following:
• Obtaining an understanding of the legal and regulatory framework that the group operates in, focusing on those laws and regulations that had a direct effect on the financial statements and operations;
• Obtaining an understanding of the group’s policies and procedures on fraud risks, including knowledge of any actual, suspected or alleged fraud;
• Discussing among the engagement team how and where fraud might occur in the financial statements and any potential indicators of fraud through our knowledge and understanding of the group and our sector- specific experience.
As a result of these procedures, we considered the opportunities and incentives that may exist within the group for fraud. We are also required to perform specific procedures to respond to the risk of management override. As a result of performing the above, we identified the following areas as those most likely to have an impact on the financial statements: employment law, and compliance with the UK Companies Act.
In addition to the above, our procedures to respond to risks identified included the following:
• Making enquiries of management, about any known or suspected instances of non-compliance with laws and regulations and fraud;
• Auditing the risk of management override of controls, including through testing journal entries and other adjustments for appropriateness; and
• Challenging assumptions andjudgements made by management in their significant accounting estimates.
A further description of our responsibilities is available on the Financial Reporting Council’s website at: https://www.frc.org.uk/auditorsresponsibilities. This description forms part of our auditor's report.
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 an auditor's report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the company and the company’s members as a body, for our audit work, for this report, or for the opinions we have formed.
As permitted by s408 Companies Act 2006, the company has not presented its own profit and loss account and related notes. The company’s loss for the year was £2,131,425 (2022 - £1,392,832 loss).
Generate Topco Limited (“the company”) is a private limited company domiciled and incorporated in England and Wales. The registered office is Boxpark, 3rd Floor, 60 Worship Road, London, EC2A 2EZ.
The group consists of Generate Topco Limited and all of its subsidiaries.
These financial statements have been prepared in accordance with FRS 102 “The Financial Reporting Standard applicable in the UK and Republic of Ireland” (“FRS 102”) and the requirements of the Companies Act 2006.
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 under the historical cost convention. The principal accounting policies adopted are set out below.
The company is a qualifying entity for the purposes of FRS 102, being a member of a group where the parent of that group prepares publicly available consolidated financial statements, including this company, which are intended to give a true and fair view of the assets, liabilities, financial position and profit or loss of the group. The company has therefore taken advantage of exemptions from the following disclosure requirements for parent company information presented within the consolidated financial statements:
Section 7 ‘Statement of Cash Flows’: Presentation of a statement of cash flow and related notes and disclosures;
Section 33 ‘Related Party Disclosures’: Compensation for key management personnel.
The consolidated financial statements incorporate those of Generate Topco Limited and all of its non-dormant subsidiaries. Subsidiaries acquired during the year are consolidated using the purchase method. All intra-group transactions, balances and unrealised gains on transactions between group companies are eliminated on consolidation.
Entities in which the group holds an interest and which are jointly controlled by the group and one or more other ventures under a contractual arrangement are treated as joint ventures. In the group financial statements, joint ventures are accounted for using the equity method. The joint venture has a different year end to the rest of the group, being 31 December 2022, and is detailed management accounts have been used to determine the result for this entity, up to the year end date, to be included in the consolidated accounts.
At the time of approving the financial statements, the directors have a reasonable expectation that the group has adequate resources to continue in operational existence for the foreseeable future. The directors have considered relevant information, including the groups principal risks and uncertainties and the impact of subsequent events in making their assessment.
At the reporting date, the company has net current liabilities of £5,070,123 however this is largely due to amounts payable to a fellow group company of £4,964,491. The directors of the fellow group company, who are also directors of Generate Topco Limited, have confirmed that payment of the liability will not be demanded until Generate Topco Limited has adequate resources to make such a payment. The directors of the fellow group company have also confirmed the availability of financial support to be made to Generate Topco Limited as required, for the foreseeable future and for at least 12 months from the date of the approval of the financial statements.
Based on these assessments and having regard to the resources available to the group, the directors have concluded that there is no material uncertainty and that they can continue to adopt the going concern basis in preparing the annual report and financial statements.
Turnover is recognised at the fair value of the consideration received or receivable for goods and services provided in the normal course of business, and is shown net of VAT. Turnover is recognised when the company has transferred risks and rewards of ownership to the buyer.
Rental income from outlets leased out under operating leases is recognised in the group statement of comprehensive income on a straight-line basis over the life of the lease. Contingent rents, which comprise turnover rents, are recognised as income in the periods in which they are earned.
Lease incentives are recognised as an integral part of the net consideration for use of the property and amortised on a straight-line basis over the life of the lease.
The gain or loss arising on the disposal of an asset is determined as the difference between the sale proceeds and the carrying value of the asset, and is recognised in the profit and loss account.
In the parent company financial statements, investments in subsidiaries, associates and jointly controlled entities are initially measured at cost and subsequently measured at cost less any accumulated impairment losses.
A subsidiary is an entity controlled by the group. Control is the power to govern the financial and operating policies of the entity so as to obtain benefits from its activities.
Entities in which the group has a long term interest and shares control under a contractual arrangement are classified as jointly controlled entities.
At each reporting period end date, the group reviews the carrying amounts of its tangible and intangible assets to determine whether there is any indication that those assets have suffered an impairment loss. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment loss.
Recoverable amount is the higher of fair value less costs to sell and value in use. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset for which the estimates of future cash flows have not been adjusted.
If the recoverable amount of an asset is estimated to be less that its carrying amount, the carrying amount of the asset is reduced to its recoverable amount. An impairment loss is recognised immediately in profit or loss.
The group has elected to apply the provisions of Section 11 ‘Basic Financial Instruments’ and Section 12 ‘Other Financial Instruments Issues’ of FRS 102 to all of its financial instruments.
Basic financial assets, which include trade and other debtors and cash and bank balances, are initially measured at transaction price including transaction costs and are subsequently carried at amortised cost.
Basic financial liabilities, including trade and other 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.
Equity instruments issued by the group are recorded at the proceeds received, net of transaction costs. Dividends payable on equity instruments are recognised as liabilities once they are no longer at the discretion of the group.
The tax expense represents the sum of the tax currently payable and deferred tax.
The tax currently payable is based on taxable profit for the year.
Deferred tax liabilities are generally recognised for all timing differences and deferred tax assets are recognised to the extent that it is probable that they will be recovered against the reversal of deferred tax liabilities or other future taxable profits.
The costs of short-term employee benefits are recognised as a liability and an expense, unless those costs are required to be recognised as part of the cost of stock or fixed assets.
Payments to defined contribution retirement benefit schemes are charged as an expense as they fall due.
Rentals payable under operating leases, including any lease incentives received, are charged to income on a straight line basis over the term of the relevant lease except where another more systematic basis is more representative of the time pattern in which economic benefits from the lease asset are consumed.
Rental income from operating leases is recognised on a straight line basis over the term of the relevant lease.
Grants are credited to deferred revenue. Grants towards capital expenditure are released to the profit and loss account over the expected useful life of the assets. Grants towards revenue expenditure are released to the profit and loss account as the related expenditure is incurred.
In the application of the group’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.
As detailed in note 1.3 the directors have concluded that there is no material uncertainty relating to going concern for the group or company. Therefore they have continued to adopt the going concern basis in preparing the annual report and accounts.
The estimates and assumptions which have a significant risk of causing a material adjustment to the carrying amount of assets and liabilities are as follows.
The directors believe that no impairment is required to the carrying value of the investment in subsidiaries in the company of £31,774,659 (2022 - £31,774,659). As a result of this they also believe there is no impairment required to the carrying value of goodwill in the group, created from the purchase of these subsidiaries during the prior year, of £21,909,576 (2022 - £24,538,725).
The group has recognised a provision for dismantling and restoring the Shoreditch and Croydon sites at the end of the respective leases. This is based on cost estimates per square foot provided by an external expert. The value of the provision at the reporting date was £730,000 (2022 - £608,000).
The group has estimated the residual value of the development assets at the Shoreditch and Croydon sites, being the capital construction costs which are being appropriately depreciated over the term of the lease. The estimate is calculated based on the scrap value of the steel used to construct the sites, as well as the resale value of the containers used to accommodate tenants. The residual value of development assets owned by the group at the reporting date was £339,615 (2022 - £339,615).
The average monthly number of persons (including directors) employed by the group and company during the year was:
Their aggregate remuneration comprised:
The actual charge/(credit) for the year can be reconciled to the expected credit for the year based on the profit or loss and the standard rate of tax as follows:
Details of the company's subsidiaries at 30 April 2023 are as follows:
Registered office addresses:
Details of joint ventures at 30 April 2023 are as follows:
Amounts owed by group undertakings and participating interests have no terms and are therefore repayable on demand. Whilst the classification as current assets reflects the contractual nature of the loans, the company does not seek repayment of these loans until the entities are financially able to do so. This may be more than 12 months from the reporting date, as part of the company's ongoing financial support to the rest of the group.
Amounts owed to group undertakings and participating interests have no terms and are therefore repayable on demand. Whilst the classification as current liabilities reflects the contractual nature of the loans, the creditor company will not seek repayment of these loans until Generate Topco Limited is financially able to do so. This may be more than 12 months from the reporting date, as part of the ongoing financial support companies of the group provide each other.
The bank loan was secured by a charge over the share capital of a subsidiary company and interest was charged at a fixed rate of 10.9% per annum on this balance. The loan has been repaid in full within the year.
The loan payable to group undertakings is secured by fixed and floating charges over all assets belonging to the group, and interest is charged at a fixed rate of 10% per annum. The loan is due for repayment in full on 2 September 2028.
Other loans include a loan of £12,000,000 which is secured by fixed and floating charges over all assets belonging to the group, and interest is charged at a variable rate of 8.5% above the Sterling Overnight Index Average ("SONIA") per annum. This loan is due for repayment in full on 2 September 2027. Other loans also includes a number of secured and unsecured loan notes, on which interest is charged at a fixed rate of 10% per annum, and which are due for repayment in full on 2 September 2028.
The following are the major deferred tax liabilities and assets recognised by the group and company, and movements thereon:
The deferred tax asset set out above relates to the utilisation of tax losses against future expected profits of the same period. The deferred tax liability set out above relates to accelerated capital allowances that are expected to mature in a future period.
A defined contribution pension scheme is operated for all qualifying employees. The assets of the scheme are held separately from those of the group in an independently administered fund.
On 3 November 2022, 5,000 £0.01 C Ordinary shares were allotted at par value.
All of the share classes have the following rights: entitled to receive notice of, attend and to vote at any general meeting. Entitled to pro-rata share of dividends and distributions in proportion to number of shares held, subject to the articles of association. Entitled to pro-rata share of capital distributions in proportion to number of shares held, subject to the articles of association. No right to redeem shares.
At the reporting end date the group had outstanding commitments for future minimum lease payments under non-cancellable operating leases, which fall due as follows:
At the reporting end date the group had contracted with tenants for the following minimum lease payments:
The group has the following fixed charges:
Over all the assets of the parent company, including a negative pledge.
There are a number of fixed and floating debentures over various property and undertakings of the group, including negative pledges.
The following fixed charges were outstanding at the reporting date, but have been satisfied since the year-end:
In the parent company, over the shares of a subsidiary company, including negative pledge.
Rights to, title and interest in any of the container boxes and all related property rights held within the parent company.
Over the assignment of material contracts and insurance policies of the company, including negative pledge, in a subsidiary company.
Over the bank accounts of the company, including negative pledge, in a subsidiary company.
During the year, the group and company incurred costs of £213,058 (2022 - £50,000) from LDC (Managers) Limited, a connected company under common control of a shareholder of the group. At the balance sheet date, £221,050 (2022 - £nil) is due to LDC (Managers) Limited and is shown within trade creditors.
During the year, the group and company incurred interest charges of £1,225,664 (2022 - £759,149) on a loan from the immediate parent company, LDC X LP. At the balance sheet date the group and company owed £13,482,301 (2022 - £12,256,637) to LDC X LP, being a loan note of £11,497,488 (2022 - £11,497,488) and accrued interest payable of £1,984,813 (2022 - £759,149). This amount is included within creditors falling due after more than one year.
During the year, the group charged management fees of £200,000 (2022 - £216,667) and incurred costs of £786,130 (2022 - £586,915) from, BPQW LLP. At the balance sheet date, £82,679 (2022 - £313,459) is owed from BPQW LLP and is shown within debtors due within one year.
During the year the group recharged costs of £805 (2022 - £59,390) to, and incurred costs of £58,310 (2022 - £52,601) from Brands Inc Limited. At the balance sheet date, £Nil (2022 - £Nil) is owed to the group. This company is a connected company as it is under the control of a shareholder of the group.
During the year, the group incurred costs of £5,700 (2022 - £nil) from Bechouse Limited, a company in which one of the group's directors is both a director and a shareholder.
The ultimate controlling party is Lloyds Banking Group PLC. Their registered address is: The Mound, Edinburgh, EH1 1YZ
Non-cash movements shown above of £1,279,598 relate to interest charges accrued on borrowings.