Company registration number 08877343 (England and Wales)
LN-CC AC LTD
FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
FILLETED ACCOUNTS
Tavistock House South
Tavistock Square
Rayner Essex LLP
London
Chartered Accountants
WC1H 9LG
LN-CC AC LTD
CONTENTS
Page
Balance sheet
1
Notes to the financial statements
2 - 10
LN-CC AC LTD
BALANCE SHEET
AS AT
31 DECEMBER 2022
31 December 2022
- 1 -
2022
2021
As restated
Notes
£
£
£
£
Fixed assets
Intangible assets
4
25,891
40,855
Tangible assets
5
27,805
25,676
53,696
66,531
Current assets
Stocks
6
29,649
325,252
Debtors
7
3,309,580
1,877,117
Cash at bank and in hand
32,481
3,890
3,371,710
2,206,259
Creditors: amounts falling due within one year
8
(5,324,318)
(3,710,138)
Net current liabilities
(1,952,608)
(1,503,879)
Total assets less current liabilities
(1,898,912)
(1,437,348)
Creditors: amounts falling due after more than one year
9
(2,379,054)
(2,178,825)
Net liabilities
(4,277,966)
(3,616,173)
Capital and reserves
Called up share capital
10,000
10,000
Share premium account
3,832,651
3,832,651
Capital contribution
614,879
614,879
Profit and loss reserves
(8,735,496)
(8,073,703)
Total equity
(4,277,966)
(3,616,173)
The director of the company has elected not to include a copy of the profit and loss account within the financial statements.true
These financial statements have been prepared and delivered in accordance with the provisions applicable to companies subject to the small companies regime.
The financial statements were approved and signed by the director and authorised for issue on 12 February 2024
C Morassutto
Director
Company Registration No. 08877343
LN-CC AC LTD
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
- 2 -
1
Accounting policies
Company information
LN-CC AC Ltd is a private company limited by shares incorporated in England and Wales. The registered office is 6th Floor, One London Wall, London, EC2Y 5EB.
1.1
Accounting convention
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 as applicable to companies subject to the small companies regime. The disclosure requirements of section 1A of FRS 102 have been applied other than where additional disclosure is required to show a true and fair view.
The 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 £.
The financial statements have been prepared under the historical cost convention. The principal accounting policies adopted are set out below.
1.2
Going concern
These financial statements are prepared on the going concern basis. As at 31 December 2022, the company had incurred a net loss of £661,793 (2021: £508,453) during the year then ended. Despite the result, the director has a reasonable expectation that the company will continue in operational existence for the foreseeable future. However, the director is aware of certain material uncertainties which may cause doubt on the company's ability to continue as a going concern. The validity of this assumption depends upon the continued support of the company's fellow group companies.
In assessing the appropriateness of the going concern assumption, the director has prepared forecasts and the company is currently carrying out significant improvement works on its leasehold property further evidencing its intention to continue to trade and to supply goods in the UK.
The immediate parent company LN-CC Italia S.r.l has evidenced its continued financial support via additional funding provided during the year. The director has also received written confirmation from the immediate parent company that it will continue to provide financial support to the company until at least 31 March 2025 so that the company can meet its liabilities as they fall due.
The financial statements do not include any adjustment that would result from the withdrawal of the continued support described above.
1.3
Turnover
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 and other sales related taxes. The fair value of consideration takes into account trade discounts, settlement discounts and volume rebates.
Revenue from the sale of goods is recognised when the significant risks and rewards of ownership of the goods have passed to the buyer (usually on dispatch of the goods), the amount of revenue can be measured reliably, it is probable that the economic benefits associated with the transaction will flow to the entity and the costs incurred or to be incurred in respect of the transaction can be measured reliably.
Revenue from contracts for the provision of services is recognised by reference to the terms of the contract.
Royalty income is recognised on an accruals basis. Royalties are recorded when it is probable that the economic benefits associated with the transaction will flow to the entity.
LN-CC AC LTD
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2022
1
Accounting policies
(Continued)
- 3 -
1.4
Intangible fixed assets - goodwill
Goodwill represents the excess of the cost of acquisition of unincorporated businesses over the fair value of net assets acquired. It is initially recognised as an asset at cost and is subsequently measured at cost less accumulated amortisation and accumulated impairment losses. Goodwill is considered to have a finite useful life and is amortised on a systematic basis over its expected life, which is 10 years.
For the purposes of impairment testing, goodwill is allocated to the cash-generating units expected to benefit from the acquisition. Cash-generating units to which goodwill has been allocated are tested for impairment at least annually, or more frequently when there is an indication that the unit may be impaired. If the recoverable amount of the cash-generating unit is less than the carrying amount of the unit, the impairment loss is allocated first to reduce the carrying amount of any goodwill allocated to the unit and then to the other assets of the unit pro-rata on the basis of the carrying amount of each asset in the unit.
1.5
Tangible fixed assets
Tangible fixed assets are initially measured at cost and subsequently measured at cost or valuation, net of depreciation and any impairment losses.
Depreciation is recognised so as to write off the cost or valuation of assets less their residual values over their useful lives on the following bases:
Leasehold improvements
Straight line over the life of the lease
Fixtures and fittings
5 years straight line
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 credited or charged to profit or loss.
1.6
Impairment of fixed assets
At each reporting period end date, the company 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 (if any). Where it is not possible to estimate the recoverable amount of an individual asset, the company estimates the recoverable amount of the cash-generating unit to which the asset belongs.
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 (or cash-generating unit) is estimated to be less than its carrying amount, the carrying amount of the asset (or cash-generating unit) is reduced to its recoverable amount. An impairment loss is recognised immediately in profit or loss, unless the relevant asset is carried at a revalued amount, in which case the impairment loss is treated as a revaluation decrease.
Recognised impairment losses are reversed if, and only if, the reasons for the impairment loss have ceased to apply. Where an impairment loss subsequently reverses, the carrying amount of the asset (or cash-generating unit) is increased to the revised estimate of its recoverable amount, but so that the increased carrying amount does not exceed the carrying amount that would have been determined had no impairment loss been recognised for the asset (or cash-generating unit) in prior years. A reversal of an impairment loss is recognised immediately in profit or loss, unless the relevant asset is carried at a revalued amount, in which case the reversal of the impairment loss is treated as a revaluation increase.
LN-CC AC LTD
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2022
1
Accounting policies
(Continued)
- 4 -
1.7
Stocks
Stocks are stated at the lower of cost and estimated selling price less costs to complete and sell. Cost comprises direct materials and, where applicable, direct labour costs and those overheads that have been incurred in bringing the stocks to their present location and condition.
Stocks held for distribution at no or nominal consideration are measured at the lower of cost and replacement cost, adjusted where applicable for any loss of service potential.
At each reporting date, an assessment is made for impairment. Any excess of the carrying amount of stocks over its estimated selling price less costs to complete and sell is recognised as an impairment loss in profit or loss. Reversals of impairment losses are also recognised in profit or loss.
1.8
Cash and cash equivalents
Cash and cash equivalents are basic financial assets and include cash in hand, deposits held at call with banks, other short-term liquid investments with original maturities of three months or less, and bank overdrafts. Bank overdrafts are shown within borrowings in current liabilities.
1.9
Financial instruments
The company 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.
Financial instruments are recognised in the company's balance sheet when the company becomes party to the contractual provisions of the instrument.
Financial assets and liabilities are offset, with the net amounts presented in the financial statements, when there is a legally enforceable right to set off the recognised amounts and there is an intention to settle on a net basis or to realise the asset and settle the liability simultaneously.
Basic financial assets
Basic financial assets, which include debtors and cash and bank balances, are initially measured at transaction price including transaction costs and are subsequently carried at amortised cost using the effective interest method unless the arrangement constitutes a financing transaction, where the transaction is measured at the present value of the future receipts discounted at a market rate of interest. Financial assets classified as receivable within one year are not amortised.
Classification of financial liabilities
Financial liabilities and equity instruments are classified according to the substance of the contractual arrangements entered into. An equity instrument is any contract that evidences a residual interest in the assets of the company after deducting all of its liabilities.
Basic financial liabilities
Basic financial liabilities, including creditors, bank loans, loans from fellow group companies and preference shares that are classified as debt, are initially recognised at transaction price unless the arrangement constitutes a financing transaction, where the debt instrument is measured at the present value of the future payments discounted at a market rate of interest. For intragroup loans, the difference between the face value of the loan and the discounted amount on recognition is classified as a capital contribution with Equity. Financial liabilities classified as payable within one year are not amortised.
Debt instruments are subsequently carried at amortised cost, using the effective interest rate method.
Trade creditors are obligations to pay for goods or services that have been acquired in the ordinary course of business from suppliers. Amounts payable are classified as current liabilities if payment is due within one year or less. If not, they are presented as non-current liabilities. Trade creditors are recognised initially at transaction price and subsequently measured at amortised cost using the effective interest method.
LN-CC AC LTD
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2022
1
Accounting policies
(Continued)
- 5 -
1.10
Equity instruments
Equity instruments issued by the company 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 company.
1.11
Employee benefits
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.
The cost of any unused holiday entitlement is recognised in the period in which the employee’s services are received.
Termination benefits are recognised immediately as an expense when the company is demonstrably committed to terminate the employment of an employee or to provide termination benefits.
1.12
Retirement benefits
Payments to defined contribution retirement benefit schemes are charged as an expense as they fall due.
1.13
Leases
Rentals payable under operating leases, including any lease incentives received, are charged to profit or loss 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 leases asset are consumed.
1.14
Government grants
Government grants are recognised at the fair value of the asset received or receivable when there is reasonable assurance that the grant conditions will be met and the grants will be received.
A grant that specifies performance conditions is recognised in income when the performance conditions are met. Where a grant does not specify performance conditions it is recognised in income when the proceeds are received or receivable. A grant received before the recognition criteria are satisfied is recognised as a liability.
1.15
Foreign exchange
Transactions in currencies other than pounds sterling are recorded at the rates of exchange prevailing at the dates of the transactions. At each reporting end date, monetary assets and liabilities that are denominated in foreign currencies are retranslated at the rates prevailing on the reporting end date. Gains and losses arising on translation in the period are included in profit or loss.
1.16
Long term incentive accrual
The estimated amount of the long term incentive bonus which is expected to be paid once the vesting period has lapsed is recognised at the time the agreement is signed. This is reviewed annually and adjusted according to changes in assumptions.
LN-CC AC LTD
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2022
- 6 -
2
Judgements and key sources of estimation uncertainty
In the application of the company’s accounting policies, the director is 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.
Critical judgements
The following judgements (apart from those involving estimates) have had the most significant effect on amounts recognised in the financial statements.
Interest rates used in long term discounting
Long term loans represent the present value of the anticipated future cash outflows. The discount rate used to calculate the present value represents the minimum acceptable rate of return for the group and is based on the average interest rates paid by the group to third party finance providers. If a different discount rate were to be used then this may have a material impact on the financial statements.
3
Employees
The average monthly number of persons (including directors) employed by the company during the year was:
2022
2021
Number
Number
Total
16
13
4
Intangible fixed assets
Goodwill
£
Cost
At 1 January 2022
153,497
Additions
401
At 31 December 2022
153,898
Amortisation and impairment
At 1 January 2022
112,642
Amortisation charged for the year
15,365
At 31 December 2022
128,007
Carrying amount
At 31 December 2022
25,891
At 31 December 2021
40,855
LN-CC AC LTD
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2022
- 7 -
5
Tangible fixed assets
Land and buildings
Plant and machinery etc
Total
£
£
£
Cost
At 1 January 2022
112,490
94,356
206,846
Additions
16,430
16,430
Disposals
(109,112)
(36,603)
(145,715)
At 31 December 2022
3,378
74,183
77,561
Depreciation and impairment
At 1 January 2022
105,743
75,427
181,170
Depreciation charged in the year
2,249
7,554
9,803
Eliminated in respect of disposals
(104,614)
(36,603)
(141,217)
At 31 December 2022
3,378
46,378
49,756
Carrying amount
At 31 December 2022
27,805
27,805
At 31 December 2021
6,747
18,929
25,676
6
Stocks
2022
2021
£
£
Stocks
29,649
325,252
7
Debtors
2022
2021
Amounts falling due within one year:
£
£
Trade debtors
3,135,472
1,755,396
Other debtors
174,108
121,721
3,309,580
1,877,117
Included in other debtors is an amount of £40,969 (2021: £43,457) in relation to a security deposit which is due in more than one year.
LN-CC AC LTD
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2022
- 8 -
8
Creditors: amounts falling due within one year
2022
2021
£
£
Trade creditors
101,252
181,044
Amounts owed to group undertakings
5,018,616
3,364,808
Taxation and social security
30,760
16,393
Other creditors
173,690
147,893
5,324,318
3,710,138
9
Creditors: amounts falling due after more than one year
As restated
2022
2021
£
£
Amounts owed to group undertakings
2,379,054
2,178,825
Included in creditors due after one year is an amount of £nil (2021: £1,291,737) in relation to the balance due after 5 years.
10
Audit report information
As the income statement has been omitted from the filing copy of the financial statements, the following information in relation to the audit report on the statutory financial statements is provided in accordance with s444(5B) of the Companies Act 2006:
The auditor's report was qualified and the auditor reported as follows:
LN-CC AC LTD
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2022
10
Audit report information
(Continued)
- 9 -
We have audited the financial statements of LN-CC AC Ltd (the 'company') for the year ended 31 December 2022 which comprise the profit and loss account, the balance sheet 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 FRS 102 The Financial Reporting Standard applicable in the UK and Republic of Ireland (United Kingdom Generally Accepted Accounting Practice).
In our opinion, except for the effects of the matter described in the Basis for Qualified Opinion section of our report, the financial statements:
give a true and fair view of the state of the company's affairs as at 31 December 2022 and of its 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 qualified opinion
We were not appointed auditors of the company until after 31 December 2021, and thus did not observe the counting of the physical stock at the end of that year. We were unable to satisfy ourselves by alternative means concerning the stock quantities of £325,252 held at 31 December 2021 by using other audit procedures. Consequently we were unable to determine whether any adjustment to this amount at 31 December 2021 was necessary or whether there was any consequential effect on the cost of sales for the year ended 31 December 2022.
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 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 qualified opinion.
Senior Statutory Auditor:
Darren Hill FCA
Statutory Auditor:
Rayner Essex LLP
11
Operating lease commitments
Lessee
At the reporting end date the company had outstanding commitments for future minimum lease payments under non-cancellable operating leases, as follows:
2022
2021
£
£
460,000
580,000
12
Related party transactions
The company has taken advantage of the exemption available in accordance with FRS 102 paragraph 33.1A 'Related party disclosures' not to disclose transactions entered into between two or more members of a group, as the company and the parties to those transactions are wholly owned subsidiary undertakings of the group.
LN-CC AC LTD
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2022
- 10 -
13
Parent company
At the year end, the company was under the control of the ultimate parent company, Progetto 11 S.r.l, a company incorporated in Italy.
14
Prior period adjustment
Reconciliation of changes in equity
1 January
31 December
2021
2021
£
£
Adjustments to prior year
Capital contribution
614,879
614,879
Profit and loss reserves
(536,132)
(588,677)
Total adjustments
78,747
26,202
Equity as previously reported
(3,186,467)
(3,642,375)
Equity as adjusted
(3,107,720)
(3,616,173)
Analysis of the effect upon equity
Capital contribution
614,879
614,879
Profit and loss reserves
(536,132)
(588,677)
78,747
26,202
Reconciliation of changes in loss for the previous financial period
2021
£
Adjustments to prior year
Foreign exchange movement
101,204
Interest receiveable
(75,231)
Interest payable
(78,518)
Total adjustments
(52,545)
Loss as previously reported
(455,908)
Loss as adjusted
(508,453)
Notes to reconciliation
Long term loan
The prior period adjustment relates to a correction to the accounting treatment of a long-term loan provided to the company at a non-market rate of interest. This loan has been provided to the company by a fellow group company which was the company’s immediate parent company at the time the loan was granted. Previously the difference between the face value of the loan and the discounted amount on recognition was credited to the company’s profit and loss account. A prior period adjustment has been made to reclassify this credit to capital contribution within the company’s equity and an adjustment has also been made to ensure that at each balance sheet date the loan is measured at the present value of the future payments discounted at a deemed market rate of interest.