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Registration number: 11010959

Luigi TopCo Limited

Annual Report and Consolidated Financial Statements

for the Year Ended 30 June 2023

 

Luigi TopCo Limited

Contents

Company Information

1

Chairman's Report

2

Strategic Report

3 to 5

Directors' Report

6 to 9

Statement of Directors' Responsibilities

10

Independent Auditor's Report

11 to 13

Consolidated Profit and Loss Account

14

Consolidated Statement of Comprehensive Income

15

Consolidated Balance Sheet

16

Balance Sheet

17

Consolidated Statement of Changes in Equity

18

Statement of Changes in Equity

19

Consolidated Statement of Cash Flows

20

Notes to the Financial Statements

21 to 38

 

Luigi TopCo Limited

Company Information

Directors

A Troup

J Lawford

D Gaynor

D Wilkinson

K Bacon

D Earlam

S Wooldridge

N Pryce

Registered office

C1 Endeavour Place
Coxbridge Business Park
Alton Road
Farnham
GU10 5EH

Solicitors

Harrison Clark Rickerbys Limited
5 Deansway
Worcester
WR1 2JG

Bankers

Lloyds Bank Plc
18 Prince of Wales Walk
Camberley
GU15 3SJ

National Westminster Bank Plc
135 Bishopsgate
London
EC2M 3UR

Auditors

Hazlewoods LLP
Windsor House
Bayshill Road
Cheltenham
GL50 3AT

 

Luigi TopCo Limited

Chairman's Report for the Year Ended 30 June 2023

The Directors present their report for the year ended 30 June 2023.

Chairman's statement

Following a highly successful year in 2022, strong trading continued in 2023.

Despite the much-publicised inflationary pressure, resulting in interest rate rises, our market positioning and premium offering, has ensured that we have remained front of mind for our consumers.

A strong focus on safety continued to improve our accident rates, ensuring our adrenaline fuelled experience continues to get high customer advocacy.

During the year we made some material investments in our business:

We completed a major refurbishment of our Eastleigh track. This was the oldest and most under invested site in the Group, and following signing of a new lease we were able to invest in a complete site redesign, electrifying the track and rolling out a significant ancillary offer. This has really resonated with our customers driving material growth in trading, well ahead of our expectations.

Last year I reported that a key part of our strategy is the electrification of our karts, and the development of our Net Zero glide path. In the year we electrified our tracks in Brighton, Hull, Clydebank, Newcastle, Eastleigh and Nottingham. With further investment we will be over 50% electric by December 2023, with a commitment that we will not purchase any more petrol fleets after this date. This is a significant and much welcome development as we continue to lead the sector with our focus on the environment.

We have developed Combat Karts, a fun alternative to traditional karting. We believe this gamification of karting will attract a much wider customer base, increase our dwell time and increase the level of repeat customer visits.

In March 2022 we opened our first international site in Monchengladbach, Germany. The business is really resonating with the local market, and is delivering strong like for like growth, giving us confidence as we continue our planned roll out strategy in Europe.

In October 2022 we acquired Kart Palast in Munich, the largest track in Europe. The excellent team has significant expertise in bowling, and food and beverage, that will become a blueprint for how we operate in Europe. We were delighted to welcome the experienced management team and staff to the TeamSport Crew.

In the year we also commenced construction on our first site in the Netherlands at the The Wall retail development in Utrecht. The site opened, post year end, in July 2023 and has performed very well in its first few weeks of trading.

The business has always been passionate about promoting diversity and inclusion with both our customers, and our staff. In July 2023, post year end, in conjunction with F1 Academy and Motorsport UK we launched F1 Academy Discover Your Drive. This is an amazing initiative that sees us partner with Formula 1 to support the aim of getting the first female onto the F1 Grid. Initially the programme was piloted at six TeamSport tracks, with plans to expand to include every TeamSport track in the UK next year.

For the third year in a row, we were also delighted to have achieved Great Place to Work certification and be voted 26th overall, our best result to date. This is testament to the strong ethos of TeamSport, and the unwavering hard work and loyalty of all our teams. I would like to thank all our employees for their contribution.

Since the year end, trading has continued to be strong, remaining well ahead of pre pandemic levels. We have a significant investment plan in place to improve our offer further, whilst at the same time managing our cost base to ensure that we deliver a good return for all our stakeholders.





Glenn Earlam
Chairman
 

 

Luigi TopCo Limited

Strategic Report for the Year Ended 30 June 2023

The directors present their strategic report for the year ended 30 June 2023.

Principal activity

The principal activity of the group is managing and operating indoor go karting tracks.

The principal activity of the company is that of a holding company.

Fair review of the business


The results for the year which are set out in the profit and loss account show turnover of £62,923,468 (2022 - £60,646,437) and an operating profit of £4,634,134, (2022 – £12,067,350). At 30 June 2023 the group had total assets less current liabilities of £48,029,472 (2022 - £46,577,511). In addition, we held cash of £13,511,176 (2022 - £25,444,512).

As noted in the Chairman’s statement this has been a phenomenal year, that has seen the business hit a series of key milestones.

Balance sheet strength

Despite investing over £15 million in our business in the year, we had an average cash balance of £17,691,871, finishing the year with cash of £13,511,176.

Given our strong cash position our committed Revolving Facility remains undrawn, giving us an additional £2.2 million of liquidity. At the time of writing, we are finalising the drawdown of the £5m accordion facility with our existing lenders, ensuring we have the resources to deliver on our exceptional pipeline of opportunities.

From 1 January 2022 our historic covenants, that had been suspended during the Covid pandemic, have applied. Throughout the year, and for the year ahead, we have significant headroom.
 

People engagement 'Great place to work'

We have continued to focus on all areas of crew engagement throughout the last year which has helped us again to be voted one of the Best Large Companies to work for in the UK. With high levels of trading throughout the year our crew again worked tirelessly to ensure our customers have safe, unique and exciting experiences. Our focus has been maintained to ensure we find, train, retain and reward great people and during the last year we increased our rates of pay to ensure we are one of the best paying businesses within the leisure sector.

Our focus on having a diverse and inclusive culture has also led to us being voted one of the Best Companies to Work For Women, published in Elle Magazine, post year end, in August 2023. We were also voted as one of the Best Companies for Wellbeing in the UK, thanks to our focus on looking after our Crew, giving them access to wellbeing support and education.

 

Luigi TopCo Limited

Strategic Report for the Year Ended 30 June 2023

Growth strategy

Our principal strategy remains our international expansion. In March 2022, we opened our first track in Germany, in Monchengladbach. This was followed by the acquisition of Kart Palast in Munich in October 2022. This was our primary target when assessing European opportunities, and we were delighted to successfully integrate the business into TeamSport. The strong alignment of culture, and the same relentless focus on the customer, has ensured that the business has made a seamless transition as we embark on a programme of re-investment.

In the year we also signed a lease for a new site in Stuttgart, and shortly after the year end we agreed terms for a new site in Dusseldorf. With a strong pipeline we expect significant growth in Germany in the next 12-18 months.

We also opened our first site in the Netherlands in July 2023, and completed the acquisition of Kart en Bowlingcentrum Groningen B.V. in September 2023. This cements our position in Europe, where we have already built a strong in territory management team to grow the business.

Whilst international expansion is our number one strategy, we believe the UK still has significant potential for white space. In the year we identified and negotiated leases in several city centre, retail locations, enabling us to further develop our offer. We expect to announce a number of exciting new openings in 2024.

In addition, we are investing in the continued refurbishment of our existing estate. In October we reopened our oldest track in Eastleigh, after a £1.9 million refurbishment. We have similar plans for our sites in Liverpool and Warrington, as well as other significant investment programmes to electrify and rebrand sites in Reading, Crawley and Mitcham.

As reported previously, in August 2021 we experienced a fire at our track in Preston. Thankfully there was no injury to customers or staff. We were fully insured, and with the support of the whole team were finally able to reopen the track in May 2023. The new site showcases the very latest evolution of TeamSport, and we are delighted to see such a strong trading performance.

ESG

This remains a key pillar of our strategy, as it has for many years. By the end of 2023 we expect over half our sites to be fully electric, compared to just five tracks pre-pandemic. We continue to focus on reducing our energy consumption, and our impact on the environment. For the last two years we have been carbon neutral, but we recognise more needs to be done. In the next few months we will issue our first Net Zero glidepath, with a challenging plan to achieve Net Zero by 2030.

As part of our approach to ESG, diversity and inclusion has always been a priority. Our Gender Pay Gap has always been a key area of focus, to ensure that we treat our staff fairly, and ensure that we have the right balance across our business. One area identified as an opportunity was representation at Board level, and we are delighted to appoint Nicky Pryce to our Board.

Outlook

The strong trading we have seen post-Covid has continued into the first quarter of our new financial year. We are performing in line with our expectations, despite the headwinds that have hit both businesses and consumers alike across Europe.

Future developments

We expect to deliver robust performance over the next 12 months. Our focus on financial performance is critical to our management of the business, and our marketing resource is deployed to ensure we react to any softening in consumer spending.

Despite rising interest rates, our re-positioning of the business and even greater focus on premiumisation has resulted in continued strong trading performance. In addition, the development of our food and beverage offering, and installation of multiple ancillary leisure activities at TeamSport tracks, ensures that we continue to see improving spend per head.

 

Luigi TopCo Limited

Strategic Report for the Year Ended 30 June 2023

Key performance indicators

The group uses several indicators to monitor and improve development, performance, and the position of the business. Indicators are reviewed and altered to meet changes both in the internal and external environments. The Directors do not consider the inclusion of an analysis using performance indicators to be necessary to assist users of the financial statements in their understanding of the financial performance, as the key indicator is earnings before interest, tax, amortisation, and depreciation, which is shown in the financial statements. In addition, we constantly focus on short and medium term cash.

We monitor web traffic, a key source of customer bookings, as well as conversion rates etc daily. We also monitor our reputation scores on a track-by-track basis. This measures how our customers are rating their experience with us. This is the key to our success.

We also monitor our employee satisfaction, striving for year-on-year improvement. We are a customer facing business, and the engagement of our Crew is key to this.

Principal risks and uncertainties


The management of the group and the execution of the group's strategy are subject to several risks. The group uses several indicators to monitor and improve the development, performance, and position of the business. Indicators are viewed and altered to meet changes in the internal and external environments.

Falling consumer confidence and rising interest rates present a volatile environment, however, we continually assess our pricing and product offer at each site, to ensure that we offer an unrivalled value for money experience in all our locations.

Financial instruments

The group uses financial instruments as part of its financial risk management. Although not considered a major risk, the nature of its financial instruments means that they are subject to normal trading risk and liquidity risks from the covenants in operation over the outstanding debt.

In the year we took out a fixed cap interest rate hedge, ensuring we are protected from any further escalation in interest rates.

Going concern


In accordance with the Financial Reporting Council's Going Concern and Liquidity Risk: Guidance for Directors of UK Companies 2009' the Directors of all companies are now required to provide disclosures regarding the going concern basis of accounting.

We produce detailed short term cash flows to monitor our cash spend, ensuring that we maintain appropriate levels of cash. We also monitor our performance daily, ensuring that on a monthly basis we consider the validity of current forecasts. Where necessary we will redeploy capital to ensure the security of our business.

The Directors believe that the Group has sufficient financial resources available to continue in operational existence for the foreseeable future and have continued to adopt the going concern basis in preparing the financial statements.

Approved by the Board on 27 October 2023 and signed on its behalf by:


D Gaynor
Director

 

Luigi TopCo Limited

Directors' Report for the Year Ended 30 June 2023

The directors present their report and the for the year ended 30 June 2023.

Directors of the company

The directors who held office during the year were as follows:

A Troup

J Lawford

J Carr (resigned 18 October 2023)

D Gaynor

D Wilkinson

K Bacon

D Earlam

S Wooldridge

The following director was appointed after the year end:

N Pryce (appointed 18 October 2023)

Employment of disabled persons


The groups' policy is to consider the recruitment of disabled workers for those vacancies that they are able to fill. All necessary assistance with initial training courses is given. Once employed, a career plan is developed so as to ensure suitable opportunities for each disabled person. Arrangements are made, where possible, for retraining employees who become disabled, to enable them to perform work identified as appropriate to their aptitudes and abilities.

The group's selection, training, development and promotion policies ensure equal opportunities for all colleagues regardless of factors such as gender, marital status, race, age, sexual preference and orientation, color, creed, ethnic origin, religion or belief, disability or trade union affiliation. All of our decisions are based on merit.

S172 statement

The Directors believe that they have effectively implemented their duties under section 172 of the Companies Act 2006. The Group has considered the long-term strategy of the business in the strategic report and consider that this strategy will continue to deliver long term success to the business and it’s stakeholders.

The Group is committed to maintaining an excellent reputation and strives to achieve high standards. We are highly selective about which suppliers are used to deliver best value while maintaining an awareness of the environmental impact of the work that they do and strive to reduce their carbon footprint.

The Directors recognise the importance of wider stakeholders in delivering their strategy and achieving sustainability within the business. The main stakeholders in the company are considered to be the employees, suppliers and customers.

In ensuring that all our stakeholders are considered as part of every decision process we believe we act fairly between all members of the Group.

Streamlined energy and carbon reporting summary

Approach

The UK Government’s environmental reporting guidance on how to measure and report greenhouse gas emissions has been used, along with the provided greenhouse gas reporting figures for the relevant year. The financial control approach has been used to define the scope boundary.

Base year and changes in emissions

A base year of 1 July 2021 - 30 June 2022 has been used, as this is the earliest year for which reliable data was recorded and measured. The base year is used as the benchmark for emission data and consumption changes, and the changes between this reporting period and the base year have been recorded and detailed. The recalculation policy is to recalculate the base year emissions only for relevant significant changes which meet the threshold of affecting 5% of base year emissions.

 

Luigi TopCo Limited

Directors' Report for the Year Ended 30 June 2023

Operational scopes

Scope 1, scope 2 and 3 emissions have been included within this report. The Group operated from 35 buildings during this period in the UK, where electricity and gas are the primary and only utilities used. The Group owned company vehicles, vans, and karts and had staff mileage claims. All activities are based within the UK.

Scope 1 emissions consists of natural gas usage within the building and fuel for company-owned/ leased vehicles and karts.

Scope 2 emissions consists of electricity usage within the building and company-owned/ leased electric vehicles and karts.

Scope 3 emissions have been included.

Table 1 shows the breakdown of carbon emissions, in tonnes of carbon dioxide equivalent (tCO2e), by scope and specific area, with comparison to the base year.

Table 1 - Breakdown of consumption and carbon emissions by scope, with comparison to the base year, for the current reporting period 1st July 2022 - 30th June 2023.

Base Year (FY2022)

FY2023

tCO2e Change

tCO2e

% of Total

TCO2e

% of Total

Scope 1

2,381

62%

1,867

58%

(514)

Natural gas

19

0%

15

0%

(4)

Karts - Petrol w/out catalytic converters Karts - Petrol w/out catalytic converters

817

22%

627

20

(190)

Karts - Petrol with catalytic converters

1,428

39%

1,124

37%

(304)

Company Cars - Diesel (miles)

41

1%

21

1%

(20)

Company Cars - Petrol (miles)

5

0%

3

0%

(2)

Company Cars - Hybrid (miles)

9

0%

18

1%

9

Company Vans - Diesel (miles)

62

2%

59

2%

3

Scope 2

1,378

36%

1,265

40%

113

Electricity

1,374

36%

1,261

34%

113

Company Cars - Battery Electric (miles)

4

0%

4

0%

-

Scope 3

65

2%

61

2%

(4)

Grey Fleet Mileage – Diesel (miles)

22

1%

18

1%

(4)

Grey Fleet Mileage – Petrol (miles)

43

1%

43

1%

-

Total gross emissions

3,825

100%

3,193

100%

(632)

Less Renewable Electricity

(1,348)

(35%)

(1,235)

(37%)

(113)

Gross Emissions (Market Based)

2,477

65%

1,958

63%

(519)

Less Offsets

(2,400)

(64%)

(2,000)

(64%)

(400)

Total net emissions

77

1%

(42)

(1%)

(119)

 

Luigi TopCo Limited

Directors' Report for the Year Ended 30 June 2023


Carbon offsets and electricity

Electricity purchased for own use or consumption: 6,110,113 kWh.

Renewable electricity generated from owned or controlled sources: 5,965,224 kWh.

The Group recognises that it’s primary responsibility is to reduce emissions as far as possible. However, as the Group works towards responsible consumption practices, to mitigate any impact, a green tariff for 100% renewable electricity has been purchased from Shell Energy and Ecotricity. Every unit of renewable energy purchased with Shell Energy and Ecotricity comes with its own Renewable Energy Guarantee of Origin (REGO) certificate. This means there are no associated carbon emissions from electricity, reducing the carbon footprint by 1,235.24 tCO2e, however location-based grid average emissions have been used to report the emissions figure.

Intensity ratios and target

An overall intensity ratio of gross Scope 1, 2 and 3 emissions per £M Turnover has been calculated. This will allow comparison and benchmarking with similar sites and organisations and still drives energy reduction goals. Although building electricity is sourced through renewable energy contracts the location-based grid average emissions have been used to calculate intensity ratios.

The previous reduction target was to reduce gross Scope 1, 2 and 3 emissions by 5% from FY2022 to FY2023. The chosen emissions reduction target for this financial year is to reduce the overall business intensity ratio by 5% from FY2023 to FY2024. The target is based upon the intensity ratio to improve performance, rather than allow for spurious improvements due to changes in operations. If the turnover theoretically remains the same across the current and upcoming reporting periods, predicted gross emissions are 1,859.92 tCO2e. Table 2 shows the intensity ratio of £56.8M and target for the business, with comparison to the base year.

Table 2 - Overall intensity ratio, target, and predicted tCO2e, with comparison to the base year. Intensity ratios are presented as Gross and Net Scope 1, 2and 3 tCO2e/£M Turnover.

Base year (year ended 30 June 2022)

Year ending 30 June 2023

Predicted year ending 30 June 2024

tCO2e

Intensity ratio

tCO2e

Intensity ratio

Predicted tCO2e

Intensity target

Gross Emissions (Location based)

3,825

71.82

3,193

56.22

3,033

53.41

Gross emissions (Market based)

2,476

47

1,958

34

1,860

33

Net Emissions

76.92

1.44

(42)

-0.74

(40)

-0.71

Carbon reduction initiatives

Team Sport completed an Energy Savings Opportunity Scheme (ESOS) assessment in November 2019 to identify opportunities for energy savings. Team Sport are using this information to invest in reducing carbon footprint.

The following actions have been taken to reduce environmental impact:

Significant company investment continues in converting sites that run petrol engine karts, to operating electrified karts, reducing the need for ventilation as well as petrol consumption.

All direct energy supplies are now sourced through renewable energy contracts, meaning any electricity consumed at standalone sites produces no carbon emissions.

A roll out plan to replace LED lighting has begun across all sites.

 

Luigi TopCo Limited

Directors' Report for the Year Ended 30 June 2023

Disclosure of information to the auditor

Each director has taken the steps that they ought to have taken as a director in order to make themselves aware of any relevant audit information and to establish that the company's auditor is aware of that information. The directors confirm that there is no relevant information that they know of and of which they know the auditor is unaware.

Reappointment of auditors

Hazlewoods LLP have expressed their willingness to continue in office.

Approved by the Board on 27 October 2023 and signed on its behalf by:


D Gaynor
Director

 

Luigi TopCo Limited

Statement of Directors' Responsibilities

The directors are responsible for preparing the Strategic Report, Directors' Report 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 group and of the company and of the profit or loss of the group for that period. In preparing these financial statements, the directors are required to:

select suitable accounting policies and apply them consistently;

make judgements and accounting estimates that are reasonable and prudent;

state whether applicable UK Accounting Standards have been followed, subject to any material departures disclosed and explained in the financial statements; and

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 group's and the company's transactions and disclose with reasonable accuracy at any time the financial position of the group and 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 group and the company and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.

 

Luigi TopCo Limited

Independent Auditor's Report to the Members of Luigi TopCo Limited

Opinion

We have audited the financial statements of Luigi TopCo Limited (the 'parent company') and its subsidiaries (the 'group') for the year ended 30 June 2023, which comprise the Consolidated Profit and Loss Account, Consolidated Statement of Comprehensive Income, Consolidated Balance Sheet, Balance Sheet, Consolidated Statement of Changes in Equity, Statement of Changes in Equity, Consolidated Statement of Cash Flows, 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 group's and the parent company's affairs as at 30 June 2023 and of the group's loss 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 auditor responsibilities for the audit of the financial statements section of our report. We are independent of the group in accordance with the ethical requirements that are relevant to our audit of the financial statements in the 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 original financial statements were 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 included in the annual report, other than the financial statements and our auditor’s report 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 there is a material misstatement in the financial statements or a material misstatement of the other information. 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.

 

Luigi TopCo Limited

Independent Auditor's Report to the Members of Luigi TopCo Limited

Opinion on other matter 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 Directors' Report for the financial year for which the financial statements are prepared is consistent with the financial statements; and

the Strategic Report and Directors' Report have been prepared in accordance with applicable legal requirements.

Matters on which we are required to report by exception

In the light of our 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 and the Directors' Report.

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 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.

Responsibilities of directors

As explained more fully in the Statement of Directors' Responsibilities set out on page 10, 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 group’s and 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 group or the parent company or to cease operations, or have no realistic alternative but to do so.

Auditor 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 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.

 

Luigi TopCo Limited

Independent Auditor's Report to the Members of Luigi TopCo Limited

The extent to which our procedures are capable of detecting irregularities, including fraud is detailed below:

Owing to the inherent limitations of an audit, there is an unavoidable risk that material misstatements in the financial statements may not be detected, even though the audit is properly planned and performed in accordance with the ISA's (UK).

In identifying and assessing risks of material mis-statement in respect of fraud, including irregularities and non-compliance with laws and regulations, our procedures included the following:

We obtained an understanding of the legal and regulatory frameworks applicable to the company financial statements or that had a fundamental effect on the company's operations. We determined that the most significant laws and regulations included UK GAAP, UK Companies Act 2006 and taxation laws.

We understood how the company is complying with those legal and regulatory frameworks by making inquiries of management, those responsible for legal and compliance procedures.

We assessed the susceptibility of the company's financial statements to material misstatement, including how fraud might occur.

 

Audit procedures performed by the engagement team included:

Identifying and assessing the design effectiveness of controls management has in place to prevent and detect fraud;

Understanding how those charged with governance considered and addressed the potential for override of controls or other inappropriate influence over the financial reporting process. Detailed analysis of journals posted through the accounting system during the year to 30 June 2023 has been undertaken;

Understanding the controls in place to prevent and detect fraud. Reliance was not placed on controls for the entirety of the audit, instead taking a substantive testing approach, however controls were in place to prevent fraud, and they appeared to be working effectively;

Challenging assumptions and judgements made by management in its significant accounting estimates.

A further description of our responsibilities is available on the Financial Reporting Council’s website at: 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.





James Morter (Senior Statutory Auditor)
For and on behalf of Hazlewoods LLP, Statutory Auditor

Windsor House
Bayshill Road
Cheltenham
GL50 3AT

27 October 2023

 

Luigi TopCo Limited

Consolidated Profit and Loss Account for the Year Ended 30 June 2023

Notes

2023
 £

2022
 £

Turnover

3

62,923,468

60,646,437

Cost of sales

 

(24,045,759)

(19,203,010)

Other operating income

4

163,175

240,474

Gross profit

 

39,040,884

41,683,901

Administrative expenses

 

(26,746,822)

(20,775,929)

Operating profit before amortisation, depreciation and exceptional items

 

12,294,062

20,907,972

Amortisation expense

 

(3,826,009)

(3,547,645)

Depreciation expense

 

(4,995,760)

(5,122,189)

Administrative expenses - exceptional

6

(186,459)

(259,361)

Other operating income - exceptional

6

1,348,300

88,573

Operating profit

 

4,634,134

12,067,350

Interest payable and similar charges

7

(9,213,747)

(8,219,266)

(Loss)/profit before tax

 

(4,579,613)

3,848,084

Taxation

11

(689,697)

(33,175)

(Loss)/profit for the financial year

 

(5,269,310)

3,814,909

The above results were derived from continuing operations.

 

Luigi TopCo Limited

Consolidated Statement of Comprehensive Income for the Year Ended 30 June 2023

2023
£

2022
£

(Loss)/profit for the year

(5,269,310)

3,814,909

Foreign currency translation (loss)/gain

(95,252)

4,202

Total comprehensive income for the year

(5,364,562)

3,819,111

 

Luigi TopCo Limited

(Registration number: 11010959)
Consolidated Balance Sheet as at 30 June 2023

Notes

2023
 £

2022
 £

Fixed assets

 

Intangible assets

12

18,428,199

18,595,034

Tangible assets

14

26,727,195

18,407,601

 

45,155,394

37,002,635

Current assets

 

Stocks

16

1,371,280

698,962

Debtors

17

8,134,631

3,990,287

Cash at bank and in hand

 

13,511,176

25,444,512

 

23,017,087

30,133,761

Creditors: Amounts falling due within one year

18

(20,143,009)

(20,558,885)

Net current assets

 

2,874,078

9,574,876

Total assets less current liabilities

 

48,029,472

46,577,511

Creditors: Amounts falling due after more than one year

18

88,997,663

82,255,911

Provisions for liabilities

11

74,771

-

   

89,072,434

82,255,911

Capital and reserves

 

Called up share capital

20

202,730

202,730

Share premium reserve

21

786,743

786,743

Profit and loss account

21

(42,032,435)

(36,667,873)

Total equity

 

(41,042,962)

(35,678,400)

Total capital, reserves and long term liabilities

 

48,029,472

46,577,511

Approved and authorised by the Board on 27 October 2023 and signed on its behalf by:
 

D Wilkinson
Director

 

Luigi TopCo Limited

(Registration number: 11010959)
Balance Sheet as at 30 June 2023

Notes

2023
 £

2022
 £

Fixed assets

 

Investments

15

708,576

708,576

Current assets

 

Debtors

17

761,389

761,389

Creditors: Amounts falling due within one year

18

(480,492)

(480,492)

Net current assets

 

280,897

280,897

Net assets

 

989,473

989,473

Capital and reserves

 

Called up share capital

20

202,730

202,730

Share premium reserve

21

786,743

786,743

Total equity

 

989,473

989,473

The company made a loss after tax for the financial year of £Nil (2022 - loss of £Nil).

Approved and authorised by the Board on 27 October 2023 and signed on its behalf by:
 

D Wilkinson
Director

 

Luigi TopCo Limited

Consolidated Statement of Changes in Equity for the Year Ended 30 June 2023
Equity attributable to the parent company

Share capital
£

Share premium
£

Treasury share capital
£

Profit and loss account
£

Total
£

At 1 July 2021

202,727

785,833

(16,300)

(40,473,216)

(39,500,956)

Profit for the year

-

-

-

3,814,909

3,814,909

Other comprehensive income

-

-

-

4,202

4,202

Total comprehensive income

-

-

-

3,819,111

3,819,111

New share capital subscribed

3

910

-

-

913

Purchase of own share capital

-

-

(650)

-

(650)

Transfers

-

-

13,768

(13,768)

-

Other capital redemption reserve movements

-

-

3,182

-

3,182

At 30 June 2022

202,730

786,743

-

(36,667,873)

(35,678,400)

Share capital
£

Share premium
£

Profit and loss account
£

Total
£

At 1 July 2022

202,730

786,743

(36,667,873)

(35,678,400)

Loss for the year

-

-

(5,269,310)

(5,269,310)

Other comprehensive income

-

-

(95,252)

(95,252)

Total comprehensive income

-

-

(5,364,562)

(5,364,562)

At 30 June 2023

202,730

786,743

(42,032,435)

(41,042,962)

 

Luigi TopCo Limited

Statement of Changes in Equity for the Year Ended 30 June 2023

Share capital
£

Share premium
£

Total
£

At 1 July 2021

202,727

785,833

988,560

New share capital subscribed

3

910

913

At 30 June 2022

202,730

786,743

989,473

Share capital
£

Share premium
£

Total
£

At 1 July 2022

202,730

786,743

989,473

At 30 June 2023

202,730

786,743

989,473

 

Luigi TopCo Limited

Consolidated Statement of Cash Flows for the Year Ended 30 June 2023

Note

2023
 £

2022
 £

Cash flows from operating activities

(Loss)/profit for the year

 

(5,269,310)

3,814,909

Adjustments to cash flows from non-cash items

 

Depreciation and amortisation

5

8,821,769

8,669,834

Financial instrument net gains/(losses) through profit and loss

 

-

4,201

Profit on disposal of tangible assets

(1,348,300)

(41,206)

Finance costs

7

9,213,747

8,219,266

Income tax expense

11

689,697

33,175

Foreign exchange (gains)/losses

 

(108,403)

8,356

 

11,999,200

20,708,535

Working capital adjustments

 

(Increase)/decrease in stocks

16

(625,911)

4,614

Increase in trade debtors

17

(4,489,626)

(1,618,693)

(Decrease)/increase in trade creditors

18

(733,470)

3,064,377

Cash generated from operations

 

6,150,193

22,158,833

Income taxes paid

11

(551,942)

-

Net cash flow from operating activities

 

5,598,251

22,158,833

Cash flows from investing activities

 

Acquisitions of tangible assets

(13,123,232)

(5,529,021)

Proceeds from sale of tangible assets

 

1,800,835

41,206

Acquisition of intangible assets

12

(230,541)

(25,704)

Acquisition of subsidiaries (net of cash acquired)

15

(3,700,515)

-

Net cash flows from investing activities

 

(15,253,453)

(5,513,519)

Cash flows from financing activities

 

Interest paid

 

(2,268,847)

(1,814,364)

Proceeds from issue of ordinary shares, net of issue costs

 

-

913

Payments for purchase of own shares

 

-

(650)

Proceeds from bank borrowing draw downs

 

-

1,718,737

Proceeds from the issue of treasury shares

 

-

3,182

Repayment of bank borrowing

 

-

(1,700,000)

Net cash flows from financing activities

 

(2,268,847)

(1,792,182)

Net (decrease)/increase in cash and cash equivalents

 

(11,924,049)

14,853,132

Cash and cash equivalents at 1 July

 

25,444,512

10,591,380

Effect of exchange rate fluctuations on cash held

 

(9,287)

-

Cash and cash equivalents at 30 June

 

13,511,176

25,444,512

 

Luigi TopCo Limited

Notes to the Financial Statements for the Year Ended 30 June 2023

 

1

General information

The company is a private company limited by share capital, incorporated in England and Wales.

The address of its registered office is:
C1 Endeavour Place
Coxbridge Business Park
Alton Road
Farnham
GU10 5EH

 

2

Accounting policies

Summary of significant accounting policies and key accounting estimates

The principal accounting policies applied in the preparation of these financial statements are set out below. These policies have been consistently applied to all the years presented, unless otherwise stated.

Statement of compliance

These financial statements were prepared in accordance with Financial Reporting Standard 102 'The Financial Reporting Standard applicable in the United Kingdom and Republic of Ireland and the Companies Act 2006'.

Basis of preparation

These financial statements have been prepared using the historical cost convention except for, where disclosed in these accounting policies, certain items that are shown at fair value.

The presentational currency of the financial statements is Pounds Sterling, being the functional currency of the primary economic environment in which the company operates. Monetary amounts in these financial statements are rounded to the nearest Pound.

Basis of consolidation

The consolidated financial statements consolidate the financial statements of the company and its subsidiary undertakings drawn up to 30 June 2023.

A subsidiary is an entity controlled by the company. Control is achieved where the company has the power to govern the financial and operating policies of an entity so as to obtain benefits from its activities.

The results of subsidiaries acquired or disposed of during the year are included in the Profit and Loss Account from the effective date of acquisition or up to the effective date of disposal, as appropriate. Where necessary, adjustments are made to the financial statements of subsidiaries to bring their accounting policies into line with those used by the group.

The purchase method of accounting is used to account for business combinations that result in the acquisition of subsidiaries by the group. The cost of a business combination is measured as the fair value of the assets given, equity instruments issued and liabilities incurred or assumed at the date of exchange, plus costs directly attributable to the business combination. Identifiable assets acquired and liabilities and contingent liabilities assumed in a business combination are measured initially at their fair values at the acquisition date. Any excess of the cost of the business combination over the acquirer’s interest in the net fair value of the identifiable assets, liabilities and contingent liabilities recognised is recorded as goodwill.

Inter-company transactions, balances and unrealised gains on transactions between the company and its subsidiaries, which are related parties, are eliminated in full.

Intra-group losses are also eliminated but may indicate an impairment that requires recognition in the consolidated financial statements.

Accounting policies of subsidiaries have been changed where necessary to ensure consistency with the policies adopted by the group. Non-controlling interests in the net assets of consolidated subsidiaries are identified separately from the group’s equity therein. Non-controlling interests consist of the amount of those interests at the date of the original business combination and the non-controlling shareholder’s share of changes in equity since the date of the combination.

 

Luigi TopCo Limited

Notes to the Financial Statements for the Year Ended 30 June 2023

Going concern

As noted in the Strategic Report, after reviewing the group's forecasts and projections, the directors have a reasonable expectation that the group has adequate resources to continue in operational existence for the foreseeable future. The group therefore continues to adopt the going concern basis in preparing its financial statements.

Critical accounting judgements and key sources of estimation uncertainty
In the application of the group’s accounting policies, the directors are required to make judgements, estimates and assumptions about the carrying amounts 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 if the revision affects only that period, or in the period of the revision and future periods if the revision affects both current and future periods.

The estimates and assumptions that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year relate to amortisation and depreciation of intangible and tangible fixed assets and are addressed below.

Judgements

No significant judgements have been made by management in preparing these financial statements.

Revenue recognition

Turnover comprises the fair value of the consideration received or receivable for the sale of goods and provision of services in the ordinary course of the group’s activities. Turnover is shown net of sales/value added tax, returns, rebates and discounts and after eliminating sales within the group.

The group recognises revenue when:

• The amount of revenue can be reliably measured;
• it is probable that future economic benefits will flow to the entity;
• and specific criteria have been met for each of the group's activities.

Government grants

Government grants are recognised based on the accrual model and are measured at the fair value of the asset received or receivable. Grants are classified as relating either to revenue or to assets. Grants relating to revenue are recognised in income over the period in which the related costs are recognised. Grants relating to assets are recognised over the expected useful life of the asset. Where part of a grant relating to an asset is deferred, it is recognised as deferred income.

Foreign currency transactions and balances

Transactions in foreign currencies are initially recorded at the functional currency rate prevailing at the date of the transaction. Monetary assets and liabilities denominated in foreign currencies are retranslated into the respective functional currency of the entity at the rates prevailing on the reporting period date. Non-monetary items carried at fair value that are denominated in foreign currencies are retranslated at the rates prevailing on the initial transaction dates.

Non-monetary items measured in terms of historical cost in a foreign currency are not retranslated.

Tax

The tax expense for the period comprises current and deferred tax. Tax is recognised in profit or loss, except that a change attributable to an item of income or expense recognised as other comprehensive income is also recognised directly in other comprehensive income.

The current tax charge is calculated on the basis of tax rates and laws that have been enacted or substantively enacted by the reporting date in the countries where the group operates and generates taxable income.

 

Luigi TopCo Limited

Notes to the Financial Statements for the Year Ended 30 June 2023

Deferred tax is recognised on temporary differences arising between the tax bases of assets and liabilities and their carrying amounts in the consolidated financial statements and on unused tax losses or tax credits in the group. Deferred tax is determined using tax rates and laws that have been enacted or substantively enacted by the reporting date.

The carrying amount of deferred tax assets are reviewed at each reporting date and a valuation allowance is set up against deferred tax assets so that the net carrying amount equals the highest amount that is more likely than not to be recovered based on current or future taxable profit.

Tangible assets

Tangible assets are stated in the balance sheet at cost, less any subsequent accumulated depreciation and subsequent accumulated impairment losses.

The cost of tangible assets includes directly attributable incremental costs incurred in their acquisition and installation.

Depreciation

Depreciation is charged so as to write off the cost of assets over their estimated useful lives as follows:

Asset class

Depreciation method and rate

Leasehold property

over the life of the lease or 10 years

Plant and machinery

over three or six years

Motor vehicles

over two to three years

Business combinations

Business combinations are accounted for using the purchase method. The consideration for each acquisition is measured at the aggregate of the fair values at acquisition date of assets given, liabilities incurred or assumed, and equity instruments issued by the group in exchange for control of the acquired, plus any costs directly attributable to the business combination. When a business combination agreement provides for an adjustment to the cost of the combination contingent on future events, the group includes the estimated amount of that adjustment in the cost of the combination at the acquisition date if the adjustment is probable and can be measured reliably.

Goodwill

Goodwill is amortised over its useful life, which shall not exceed ten years if a reliable estimate of the useful life cannot be made.

Intangible assets

Goodwill arising on the acquisition of an entity represents the excess of the cost of acquisition over the group’s interest in the net fair value of the identifiable assets, liabilities and contingent liabilities of the entity recognised at the date of acquisition. Goodwill is initially recognised as an asset at cost and is subsequently measured at cost less accumulated amortisation and accumulated impairment losses. Goodwill is held in the currency of the acquired entity and revalued to the closing rate at each reporting period date.

Negative goodwill arising on an acquisition is recognised on the face of the balance sheet on the acquisition date and subsequently the excess up to the fair value of non-monetary assets acquired is recognised in profit or loss in the periods in which the non-monetary assets are recovered.

Development costs are initially recognised as an asset at cost and is subsequently measured at cost less accumulated amortisation and accumulated impairment losses.

Amortisation

Amortisation is provided on intangible assets so as to write off the cost, less any estimated residual value, over their useful life as follows:

Asset class

Amortisation method and rate

Goodwill

over 10 years

Software development

over 3 years

Investments

Investments in equity shares which are not publicly traded and where fair value cannot be measured reliably are measured at cost less impairment.

Dividends on equity securities are recognised in income when receivable.

 

Luigi TopCo Limited

Notes to the Financial Statements for the Year Ended 30 June 2023

Cash and cash equivalents

Cash and cash equivalents comprise cash on hand and call deposits, and other short-term highly liquid investments that are readily convertible to a known amount of cash and are subject to an insignificant risk of change in value.

Trade debtors

Trade debtors are amounts due from customers for merchandise sold or services performed in the ordinary course of business.

Trade debtors are recognised initially at the transaction price. All trade debtors are repayable within one year and hence are included at the undiscounted cost of cash expected to be received. A provision for the impairment of trade debtors is established when there is objective evidence that the group will not be able to collect all amounts due according to the original terms of the debtors.

Stocks

Stocks are stated at the lower of cost and estimated selling price less costs to complete and sell.

Trade creditors

Trade creditors are obligations to pay for goods or services that have been acquired in the ordinary course of business from suppliers. Accounts payable are classified as current liabilities if the group does not have an unconditional right, at the end of the reporting period, to defer settlement of the creditor for at least twelve months after the reporting date. If there is an unconditional right to defer settlement for at least twelve months after the reporting date, they are presented as non-current liabilities.

Trade creditors are recognised initially at the transaction price and all are repayable within one year and hence are included at the undiscounted amount of cash expected to be paid.

Borrowings

Interest-bearing borrowings are initially recorded at fair value, net of transaction costs. Interest-bearing borrowings are subsequently carried at amortised cost, with the difference between the proceeds, net of transaction costs, and the amount due on redemption being recognised as a charge to the profit and loss account over the period of the relevant borrowing.

Interest expense is recognised on the basis of the effective interest method and is included in interest payable and similar charges.

Borrowings are classified as current liabilities unless the group has an unconditional right to defer settlement of the liability for at least twelve months after the reporting date.

Leases

Leases in which substantially all the risks and rewards of ownership are retained by the lessor are classified as operating leases. Payments made under operating leases are charged to profit or loss on a straight-line basis over the period of the lease.

Share capital

Ordinary shares are classified as equity. Equity instruments are measured at the fair value of the cash or other resources received or receivable, net of the direct costs of issuing the equity instruments. If payment is deferred and the time value of money is material, the initial measurement is on a present value basis.

Defined contribution pension obligation

A defined contribution plan is a pension plan under which fixed contributions are paid into a pension fund and the group has no legal or constructive obligation to pay further contributions even if the fund does not hold sufficient assets to pay all employees the benefits relating to employee service in the current and prior periods.

Contributions to defined contribution plans are recognised as employee benefit expense when they are due. If contribution payments exceed the contribution due for service, the excess is recognised as a prepayment.

 

Luigi TopCo Limited

Notes to the Financial Statements for the Year Ended 30 June 2023

Financial instruments


Classification
Financial instruments are classified and accounted for according to the substance of the contractual arrangement, as financial assets, financial liabilities or equity instruments. An equity instrument is any contract that evidences a residual interest in the assets of the group after deducting all of its liabilities. Where shares are issued, any component that creates a financial liability of the group is presented as a liability on the balance sheet. The corresponding dividends relating to the liability component are charged as interest expenses in the profit and loss account.

 Recognition and measurement
All financial assets and liabilities are initially measured at transaction price (including transaction costs), except for those financial assets classified as at fair value through profit or loss, which are initially measured at fair value (which is normally the transaction price excluding transaction costs), unless the arrangement constitutes a financing transaction. If an arrangement constitutes a financing transaction, the financial asset or financial liability is measured at the present value of the future payments discounted at a market rate of interest for a similar debt instrument.

Financial assets and liabilities are only offset in the balance sheet when, and only when, there exists a legally enforceable right to set off the recognised amounts and the group intends either to settle on a net basis, or to realise the asset and settle the liability simultaneously.


 Impairment
Assets, other than those measured at fair value, are assessed for indicators of impairment at each balance sheet date. If there is objective evidence of impairment, an impairment loss is recognised in profit or loss as described below.

A non financial asset is impaired where there is objective evidence that, as a result of one or more events that occurred after initial recognition, the estimated recoverable value of the asset has been reduced. The recoverable amount of an asset is the higher of its fair value less costs to sell and its value in use.

The recoverable amount of goodwill is derived from measurement of the present value of the future cash flows of the cash-generating units ('CGUs') of which the goodwill is a part. Any impairment loss in respect of a CGU is allocated first to the goodwill attached to that CGU, and then to other assets within that CGU on a pro-rata basis.

Where indicators exist for a decrease in impairment loss, the prior impairment loss is tested to determine reversal. An impairment loss is reversed on an individual impaired asset to the extent that the revised recoverable value does not lead to a revised carrying amount higher than the carrying value had no impairment been recognised. Where a reversal of impairment occurs in respect of a CGU, the reversal is applied first to the assets (other than goodwill) of the CGU on a pro-rata basis and then to any goodwill allocated to that CGU.

For financial assets carried at amortised cost, the amount of an impairment is the difference between the asset’s carrying amount and the present value of estimated future cash flows, discounted at the financial asset’s original effective interest rate.

For financial assets carried at cost less impairment, the impairment loss is the difference between the asset’s carrying amount and the best estimate of the amount that would be received for the asset if it were to be sold at the reporting date.

Where indicators exist for a decrease in impairment loss, and the decrease can be related objectively to an event occurring after the impairment was recognised, the prior impairment loss is tested to determine reversal. An impairment loss is reversed on an individual impaired financial asset to the extent that the revised recoverable value does not lead to a revised carrying amount higher than the carrying value had no impairment been recognised.

 

Luigi TopCo Limited

Notes to the Financial Statements for the Year Ended 30 June 2023

 

3

Revenue

The analysis of the group's revenue for the year from continuing operations is as follows:

2023
£

2022
£

Rendering of goods and services

60,037,559

58,889,859

Other revenue

2,885,909

1,756,578

62,923,468

60,646,437

Other revenue is derived from expired liabilities, business interruption insurance receipts and other sales.

The analysis of the group's turnover for the year by market is as follows:

2023
£

2022
£

UK

56,645,807

60,447,031

Europe

6,277,661

199,406

62,923,468

60,646,437

 

4

Other operating income

The analysis of the group's other operating income for the year is as follows:

2023
£

2022
£

Other operating income (direct)

163,175

240,474

The other operating income in the current year relates to Fast Forward grant funding while in the prior year relates it relates to primarily Kickstart and Fast Forward grant funding.

 

5

Operating profit

Arrived at after charging/(crediting)

2023
 £

2022
 £

Depreciation expense

4,995,760

5,122,189

Amortisation expense

3,826,009

3,547,645

Foreign exchange (gains)/losses

(108,403)

8,356

Operating lease expense - property

7,413,759

6,749,109

Operating lease expense - plant and machinery

28,700

-

Operating lease expense - other

100,013

-

Exceptional gain on replacement of tangible fixed assets

(1,348,300)

-

 

Luigi TopCo Limited

Notes to the Financial Statements for the Year Ended 30 June 2023

 

6

Exceptional items

2023
 £

2022
 £

Exceptional expenses

186,459

259,361

Exceptional income

(1,348,300)

(88,573)

 

(1,161,841)

170,788

Exceptional administrative expenses in the current year relate predominantly to recruitment costs and small non-recurring costs while the prior year costs relate predominantly to preliminary costs incurred in relation to new sites that were subsequently aborted as well as costs related to legal claims and historical business rates costs.

Exceptional income in the current year relates to the exceptional gain arising directly as a result of the replacement of tangible fixed assets damaged or destroyed by the fire which broke out at the Group's Preston track on 15 August 2021. The prior year exceptional income relates to rental receipts relating to a previous year which the directors considered exceptional as the revenue did not relate to the prior year but rather to a preceding financial period.

 

7

Interest payable and similar expenses

2023
£

2022
£

Interest on bank overdrafts and borrowings

2,550,337

2,027,828

Interest expense on other finance liabilities

6,120,395

5,536,047

Other finance costs

543,015

655,391

9,213,747

8,219,266

 

8

Staff costs

Group
The aggregate payroll costs (including directors' remuneration) were as follows:

2023
 £

2022
 £

Wages and salaries

19,904,419

16,528,732

Social security costs

1,268,880

1,201,463

Pension costs, defined contribution scheme

624,717

271,313

21,798,016

18,001,508

The average number of persons employed by the group (including directors) during the year, analysed by category was as follows:

2023
 No.

2022
 No.

Operations

975

907

Administration and support

119

105

1,094

1,012

Company
The company incurred no staff costs and had no employees other than the directors.

 

Luigi TopCo Limited

Notes to the Financial Statements for the Year Ended 30 June 2023

 

9

Directors' remuneration

The directors' remuneration for the year was as follows:

2023
£

2022
£

Remuneration

883,288

930,349

Contributions paid to money purchase schemes

14,690

15,106

897,978

945,455

During the year the number of directors who were receiving benefits and share incentives was as follows:

2023
No.

2022
No.

Accruing benefits under money purchase pension scheme

4

6

In respect of the highest paid director:

2023
£

2022
£

Remuneration

318,397

339,657

Company contributions to money purchase pension schemes

10,000

10,000

 

10

Auditors' remuneration

2023
£

2022
£

Audit of these financial statements

40,900

30,000

Other fees to auditors

All other non-audit services

23,550

16,000


 

 

11

Taxation

Tax charged/(credited) in the consolidated profit and loss account

2023
£

2022
£

Current taxation

UK corporation tax

-

513,991

UK corporation tax adjustment to prior periods

28,929

-

28,929

513,991

Foreign tax

105,181

-

Total current income tax

134,110

513,991

Deferred taxation

Arising from origination and reversal of timing differences

934,937

718,061

Arising from previously unrecognised tax loss, tax credit or temporary difference of prior periods

(379,350)

(1,198,877)

Total deferred taxation

555,587

(480,816)

Tax expense in the income statement

689,697

33,175

 

Luigi TopCo Limited

Notes to the Financial Statements for the Year Ended 30 June 2023

 

11

Taxation (continued)

The tax on profit before tax for the year is higher than the standard rate of corporation tax in the UK (2022 - lower than the standard rate of corporation tax in the UK) of 20.5% (2022 - 19%).

The differences are reconciled below:

2023
£

2022
£

(Loss)/profit before tax

(4,579,613)

3,848,084

Corporation tax at standard rate

(938,821)

731,136

Effect of revenues exempt from taxation

(206,715)

(405,824)

Effect of expense not deductible in determining taxable profit (tax loss)

985,945

805,892

Deferred tax expense relating to changes in tax rates or laws

168,289

-

Increase from tax losses for which no deferred tax asset was recognised

-

38,234

Decrease from effect of tax incentives

(127,665)

-

Deferred tax credit from unrecognised temporary difference from a prior period

(379,351)

(2,629,314)

Increase in UK and foreign current tax from adjustment for prior periods

28,929

-

Tax increase from effect of capital allowances and depreciation

1,009,107

840,436

Tax increase arising from overseas tax suffered/expensed

105,181

-

Tax increase from effect of unrelieved loss on foreign subsidiaries

-

137,432

Other tax effects for reconciliation between accounting profit and tax expense (income)

44,798

515,183

Total tax charge

689,697

33,175

A UK corporation tax rate of 25% (effective 1 April 2023) was substantively enacted on 24 May 2021. This will increase the company's future current tax charge accordingly and as such deferred tax in both the current and prior year has been charged at 25%.

Deferred tax

Group

Deferred tax assets and liabilities

2023

Liability
£

Differences between accumulated depreciation and capital allowances

1,716,689

Losses and other deductions

(779,811)

Short-term timing differences

(862,107)

74,771

2022

Asset
£

Differences between accumulated depreciation and capital allowances

(831,711)

Losses and other deductions

1,312,527

480,816

 

Luigi TopCo Limited

Notes to the Financial Statements for the Year Ended 30 June 2023

 

12

Intangible assets

Group

Goodwill
 £

Software development costs
 £

Total
£

Cost

At 1 July 2022

34,021,486

400,477

34,421,963

Additions

3,490,732

230,571

3,721,303

Foreign exchange movements

(85,965)

-

(85,965)

At 30 June 2023

37,426,253

631,048

38,057,301

Amortisation

At 1 July 2022

15,591,492

235,437

15,826,929

Amortisation charge

3,684,094

141,915

3,826,009

Foreign exchange movements

(23,836)

-

(23,836)

At 30 June 2023

19,251,750

377,352

19,629,102

Carrying amount

At 30 June 2023

18,174,503

253,696

18,428,199

At 30 June 2022

18,429,994

165,040

18,595,034

 

Luigi TopCo Limited

Notes to the Financial Statements for the Year Ended 30 June 2023

 

13

Business combinations

On 11 October 2022, Go Karting For Fun Germany GmbH acquired 75% of the issued share capital of Kart-Palast Betriebsgesellschaft mbH, obtaining control. The remaining 25% of the issued share capital is currently held by the company as treasury shares and as a result, the group controls 100% of the voting rights and no minority interests exist.

Kart-Palast Betriebsgesellschaft mbH contributed £5,390,056 revenue and £982,201 profit to the group's loss for the period between the date of acquisition and the Balance Sheet date.

The amounts recognised in respect of the identifiable assets acquired and liabilities assumed are as set out in the table below:
 

Book value and Fair value
2023
£

Assets and liabilities acquired

Financial assets

585,131

Stocks

46,179

Tangible assets

640,342

Financial liabilities

(658,685)

Total identifiable assets

612,967

Goodwill

3,490,732

Total consideration

4,103,699

Satisfied by:

Cash

4,103,700

Cash flow analysis:

Cash consideration

4,103,700

Less: cash and cash equivalent balances acquired

(403,185)

Net cash outflow arising on acquisition

3,700,515

The useful life of goodwill is 10 years. The nature of goodwill acquired on business combination primarily relates to the track itself and its status as one of the biggest tracks in Europe.

 

Luigi TopCo Limited

Notes to the Financial Statements for the Year Ended 30 June 2023

 

14

Tangible assets

Group

Land and buildings
£

Furniture, fittings and equipment
 £

Motor vehicles
 £

Total
£

Cost

At 1 July 2022

25,514,301

9,539,304

116,449

35,170,054

Additions

4,147,101

9,701,445

-

13,848,546

Disposals

-

(1,139,428)

-

(1,139,428)

At 30 June 2023

29,661,402

18,101,321

116,449

47,879,172

Depreciation

At 1 July 2022

10,768,406

5,951,173

42,874

16,762,453

Charge for the year

2,754,637

2,294,788

31,307

5,080,732

Eliminated on disposal

-

(686,893)

-

(686,893)

Foreign exchange movements

-

(4,315)

-

(4,315)

At 30 June 2023

13,523,043

7,554,753

74,181

21,151,977

Carrying amount

At 30 June 2023

16,138,359

10,546,568

42,268

26,727,195

At 30 June 2022

14,745,895

3,588,131

73,575

18,407,601

 

15

Investments

Company

2023
£

2022
£

Investments in subsidiaries

708,576

708,576

Subsidiaries

£

Cost

At 1 July 2022

708,576

Provision

Carrying amount

At 30 June 2023

708,576

At 30 June 2022

708,576

 

Luigi TopCo Limited

Notes to the Financial Statements for the Year Ended 30 June 2023

 

15

Investments (continued)

Details of undertakings

Details of the investments in which the company holds 20% or more of the nominal value of any class of share capital are as follows:

Undertaking

Registered office

Holding

Proportion of voting rights and shares held

     

2023

2022

Subsidiary undertakings

Luigi Midco Limited

United Kingdom

Ordinary

100%

100%

Luigi Debtco Limited

United Kingdom

Ordinary

100%

100%

Luigi Bidco Limited

United Kingdom

Ordinary

100%

100%

Luigi EBT Limited

United Kingdom

Ordinary

100%

100%

Go Karting For Fun Germany GmbH

Germany

Ordinary

100%

100%

Teamsport Holdings Limited

United Kingdom

Ordinary

100%

100%

Teamsport Investments Limited

United Kingdom

Ordinary

100%

100%

Teamsport Racing Limited

United Kingdom

Ordinary

100%

100%

Go Karting For Fun Limited

United Kingdom

Ordinary

100%

100%

Go Karting For Fun (Crawley) Limited

United Kingdom

Ordinary

100%

100%

Linfix Limited

United Kingdom

Ordinary

100%

100%

Teamsport Indoor Karting (London) Limited

United Kingdom

Ordinary

100%

100%

Teamsport Indoor Karting (Brighton) Limited

United Kingdom

Ordinary

100%

100%

Kart-Palast Betreibsgesellschaft mbH

Germany

Ordinary

100%

0%

Go Karting for Fun NL BV

Netherlands

Ordinary

100%

0%

Luigi Midco Limited is held directly by the company, all other subsidiaries are indirect holdings.

Principal activity

The following companies' principal activity is that of an intermediate parent company; Luigi Midco Limited, Luigi Debtco Limited, Luigi Bidco Limited, Teamsport Holdings Limited, Teamsport Investments Limited and Teamsport Racing Limited.

With the exception of Go Karting For Fun (Crawley) Limited, Luigi EBT Limited, Teamsport Indoor Karting (London) Limited and Linfix Limited, which are all dormant companies, the remaining subsidiaries’ principal activity is the operation of indoor go karting tracks.
 

 

16

Stocks

 

Group

Company

2023
£

2022
£

2023
£

2022
£

Stocks

1,371,280

698,962

-

-

 

Luigi TopCo Limited

Notes to the Financial Statements for the Year Ended 30 June 2023

 

17

Debtors

 

Group

Company

2023
 £

2022
 £

2023
 £

2022
 £

Trade debtors

198,254

144,147

-

-

Amounts owed by group undertakings

-

-

761,030

761,030

Other debtors

3,521,571

223,344

-

-

Prepayments

4,414,806

3,141,980

359

359

Deferred tax assets

-

480,816

-

-

8,134,631

3,990,287

761,389

761,389

 

18

Creditors

 

Group

Company

2023
 £

2022
 £

2023
 £

2022
 £

Due within one year

Trade creditors

6,207,112

4,725,732

-

-

Amounts due to group undertakings

-

-

480,492

480,492

Social security and other taxes

973,525

2,042,093

-

-

Outstanding defined contribution pension costs

59,349

56,235

-

-

Other creditors

3,622,078

3,316,742

-

-

Accrued expenses

9,230,971

9,904,092

-

-

Corporation tax liability

49,974

513,991

-

-

20,143,009

20,558,885

480,492

480,492

Due after one year

Loans and borrowings

88,609,902

81,979,857

-

-

Other non-current financial liabilities

387,761

276,054

-

-

88,997,663

82,255,911

-

-

 

Luigi TopCo Limited

Notes to the Financial Statements for the Year Ended 30 June 2023

 

19

Loans and borrowings

 

Group

Company

2023
£

2022
£

2023
£

2022
£

Non-current loans and borrowings

Bank borrowings

23,856,957

23,415,555

-

-

Other borrowings

64,752,945

58,564,302

-

-

88,609,902

81,979,857

-

-

Group

Bank borrowings

Apera Facility B is denominated in GB£ with variable rates of interest currently between 7.5% and 8.25% plus SONIA. The final instalment is due on 14 November 2025. The carrying amount at year end is £15,906,342 (2022 - £15,532,324).

Accrued interest of £968,471 (2022 - £780,845) is included in the liability above, while the liability above is shown net of associated debt costs of £62,129 (2022 - £248,521) that are being released over the term of the loan against the liability.

Apera Capex is denominated in GB£ with variable rates of interest currently between 7.5% and 8.25% plus SONIA. The final instalment is due on 14 November 2025. The carrying amount at year end is £7,950,615 (2022 - £7,883,231).

In addition to the above borrowing facilities, the company has access to a revolving credit facility of £2.2 million and a standby letter of credit £1.3 million with NatWest Bank. Both facilities are denominated in GB£ and attract interest at variable rates between 2.5% and 3.25% plus SONIA. The revolving credit agreement matures on 14 November 2025 while the letter of credit expires on 27 November 2025.

The above loans are secured by way of a group guarantee and debenture. In addition, the shares of all UK based group companies below and including Luigi Debtco Limited, held by Luigi Midco Limited, are held as security over these loans.

Other borrowings

Shareholder "Series A1" loan notes are denominated in GB£ with a nominal interest rate of 10%, and the final instalment is due on 18 October 2027. The carrying amount at year end is £17,664,289 (2022 - £15,967,089).

Accrued interest of £2,444,061 (2022 - £770,598) is included in the liability above. The liability above is shown net of associated debt costs of £129,179 (2022 - £152,917) that are being released over the term of the loan against the liability.

Shareholder "Series B" loan notes are denominated in GB£ with a nominal interest rate of 10%, and the final instalment is due on 18 October 2027. The carrying amount at year end is £7,926,259 (2022 - £7,337,784).

Accrued interest of £1,993,953 (2022 - £1,202,672) is included in the liability above. The liability above is shown net of associated debt costs of £173,281 (2022 - £215,007) that are being released over the term of the loan against the liability.

Shareholder "Series A2" loan notes are denominated in GB£ with a nominal interest rate of 10%, and the final instalment is due on 18 October 2027. The carrying amount at year end is £20,028,043 (2022 - £18,144,420).

Accrued interest included this loan at year end is £2,750,996 (2022 - £867,373).

Management incentive plan "Series A2" loan notes are denominated in GB£ with a nominal interest rate of 10%, and the final instalment is due on 18 October 2027. The carrying amount at year end is £3,599,089 (2022 - £3,260,597).

 

Luigi TopCo Limited

Notes to the Financial Statements for the Year Ended 30 June 2023

 

19

Loans and borrowings (continued)

Accrued interest in this loan at year end is £494,361 (2022 - £155,869).

In addition to the above "Series A" loans, prior to the Series A restructure, interest had accrued on the original "Series A" loans. The portion of this interest which was not restructured into either the "Series A1", "Series A2" or "Series A2M" loan notes have continued to accrue interest under the same terms. At year end, £15,535,265 (2022 - £13,854,411) had accrued to date.

The above loans are secured by way of a group guarantee and debenture. In addition, the shares of Luigi Debtco Limited, held by Luigi Midco Limited, are held as security over these loans.

 

20

Share capital

Allotted, called up and fully paid shares

 

2023

2022

 

No.

£

No.

£

Ordinary A1 shares of £0.01000 each

704,416

7,044

704,416

7,044

Ordinary A1B shares of £0.00001 each

9,018,393

90

9,018,393

90

Ordinary A2 shares of £0.01000 each

43,580

436

43,580

436

Ordinary A3 shares of £0.01000 each

12,004

120

12,004

120

Ordinary A4 shares of £0.00001 each

506,828

5

506,828

5

Ordinary B1 shares of £1 each

-

-

-

-

Ordinary B2 shares of £1 each

15,000

15,000

15,000

15,000

Ordinary B3 shares of £1 each

15,000

15,000

15,000

15,000

Ordinary B5 shares of £1 each

165,000

165,000

165,000

165,000

Ordinary B6 shares of £0.00001 each

3,502,190

35

3,502,190

35

 

13,982,411

202,730

13,982,411

202,730

Rights, preferences and restrictions

Each class of share ranks pari passu except as detailed in the company's Articles of Association.

 

21

Reserves

Group

Share premium

The share premium reserve represents the value at which shares have been issued in excess of their par value.

Profit and loss account

The profit and loss account represents accumulated profits and losses along with unrealised gains since the later of either incorporation or the date at which the group obtained control.

 

22

Pension and other schemes

Defined contribution pension scheme

The group operates a defined contribution pension scheme. The pension cost charge for the year represents contributions payable by the group to the scheme and amounted to £624,717 (2022 - £271,313).

Contributions totalling £59,349 (2022 - £56,235) were payable to the scheme at the end of the year and are included in creditors.

 

Luigi TopCo Limited

Notes to the Financial Statements for the Year Ended 30 June 2023

 

23

Obligations under leases and hire purchase contracts

Group

Operating leases

The total of future minimum lease payments is as follows:

2023
£

2022
£

Not later than one year

6,532,026

6,188,633

Later than one year and not later than five years

20,534,326

19,067,136

Later than five years

15,165,259

8,048,248

42,231,611

33,304,017

The amount of non-cancellable operating lease payments recognised as an expense during the year was £7,413,756 (2022 - £6,749,109).

 

24

Commitments

Group

Capital commitments

The group has contracted to undertake various petrol kart replacements, refurbishments, purchasing of new carts, electrification and rebrand of various sites in support of the various sites core functions as well as expansion of certain existing sites operations or offerings. These costs have not been provided for as work on these projects has not yet started.

The total amount contracted for but not provided in the financial statements was £5,512,018 (2022 - £Nil).

 

25

Related party transactions

Group and company

The company has taken the exemption of not disclosing transactions with wholly owned subsidiaries. While the group only owns 75% of Kart-Palast Betriebsgesellscheft mbH, the remaining 25% of the shares have been retained by the company for resale in the future and as such, the company has been treated as wholly owned as there are no other shareholders other than the Luigi Topco Limited Group.

Transactions with related parties include transactions with members of key management, which are considered to consist of the directors only. Disclosure of remuneration of directors can be found in note 9.

Transactions with shareholders include the interest charged on shareholder loan notes which has been described further in note 19. None of this interest was paid in the year. In addition, during the year, the shareholder charged monitoring fees of £225,000 (2022 - £225,000) in respect of board monitoring across the TeamSport Group.

 

Luigi TopCo Limited

Notes to the Financial Statements for the Year Ended 30 June 2023

 

26

Analysis of changes in net debt

Group

At 1 July 2022
£

Cash flows
£

Interest and debt costs paid
£

Interest charge and accrued debt costs
£

New financial instruments
£

Foreign exchange movements
£

Non-cash changes
£

At 30 June 2023
£

Cash and cash equivalents

Cash

25,444,512

(11,924,049)

-

-

-

(9,287)

-

13,511,176

Borrowings

Bank borrowings

(23,415,555)

-

2,311,847

(2,776,051)

-

-

-

(23,879,759)

Other borrowings

(58,564,302)

-

-

(6,188,643)

-

-

-

(64,752,945)

Lease liabilities

(276,054)

-

-

-

-

-

(111,707)

(387,761)

Interest rate cap hedge instrument

-

-

-

-

249,385

-

-

249,385

(82,255,911)

-

2,311,847

(8,964,694)

249,385

-

(111,707)

(88,771,080)

Net debt

(56,811,399)

(11,924,049)

2,311,847

(8,964,694)

249,385

(9,287)

(111,707)

(75,259,904)

 

27

Non adjusting events after the financial period

On 28th September 2023 we added our second track in the Netherlands through the acquisition of Kart en Bowlingcentrum Groningen BV.

 

28

Parent and ultimate parent undertaking

This company has no one controlling party.