The directors present the strategic report for the year ended 31 May 2023.
During the year to 31 May 2023, the Group continued to grow healthily following the end of Covid restrictions in the previous year.
Electric Brixton continued to operate strongly, SWX Bristol re-launched and NX Newcastle launched successfully in September 2022. SWX Bristol reopened following a substantial refurbishment following the arson at the venue, for which the culprit was found and imprisoned. Insurance proceeds were received in the period relating to the fire of £2.945m (2022: £nil). NX Newcastle, following a significant refurbishment, opened as a new venue under Group operation for the first time to great acclaim.
As can be seen in the cash flow statement, in FY23 the Group invested £6.46m net cash in investing activities, in addition to £1.06m in the previous year, for these refurbishments.
Turnover for the Group almost doubled to £8,135,436 (2022: £4,227,664) driven by the two newly refurbished venues and supported by strong performance at Electric Brixton. The number of events more than doubled from 177 in FY22 to 431 (144% growth), supported by a footfall of 422,670 admissions across the Group’s portfolio (146% growth from 171,968 in FY22).
Despite significant pre-opening, marketing and launch costs, EBITDA for 3 trading venues demonstrated a healthy 12% growth from the previous year at £1.09m (2022: £0.97m).
Net assets of the Group as at 31 March 2023 were £5,774,570 (2022: £3,870,978), even after recognising impairment losses on one of the freehold properties of £1,928,603.
The Board has overall responsibility for risk management and the system of internal controls, and for reviewing their effectiveness. Monitoring exposure to risk and uncertainty is an integral part of the company’s management processes, and risk management activities are designed to manage rather than eliminate risk.
Generally the principal risk that the Group faces are operational risk, competition, regulatory and legislative impacts, recruitment and retention of staff, and maintenance of reputation, as well as financial risk.
The Group acknowledges increases in the cost of living and inflation rates during the year however does not consider these a principal risk or uncertainty.
The Group acknowledges increases in the costs of living and inflation rates during the year, and how this may impact its operations. The Group does not consider these a principal risk or uncertainty.
The group’s key performance indicators are footfall, number of shows, gross profit, gross profit margin and operating profit before exceptional items. The directors monitor the group’s KPIs on a regular basis in order to assess the group’s ongoing financial performance. The performance of the group in the current and prior year can be summarised as follows:
2023 2022 % movement
Turnover £8,135,436 £4,227,664
Number of shows 431 177 144%
Footfall. 422,670 171,968 146%
The Group will continue to actively pursue new opportunities relating to the development of its circuit of touring-class music venues. The Group intends on undertaking a refurbishment and rebranding of its Freehold venue, the Sheffield Leadmill when legal proceedings are concluded.
On behalf of the board
The directors present their annual report and financial statements for the year ended 31 May 2023.
The results for the year are set out on page 8.
No ordinary dividends were paid. The directors do not recommend payment of a further dividend.
The directors who held office during the year and up to the date of signature of the financial statements were as follows:
HW Fisher LLP were appointed as auditor to the group and in accordance with section 485 of the Companies Act 2006, a resolution proposing that they be re-appointed will be put at a General Meeting.
We have audited the financial statements of Electric Group Holdings Limited (the 'parent company') and its subsidiaries (the 'group') for the year ended 31 May 2023 which comprise the group statement of comprehensive income, the group balance sheet, the company balance sheet, the group statement of changes in equity, the company statement of changes in equity, the group statement of cash flows and notes to the financial statements, including significant accounting policies. The financial reporting framework that has been applied in their preparation is applicable law and United Kingdom Accounting Standards, including FRS 102 The Financial Reporting Standard applicable in the UK and Republic of Ireland (United Kingdom Generally Accepted Accounting Practice).
Basis for opinion
We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and applicable law. Our responsibilities under those standards are further described in the Auditor's responsibilities for the audit of the financial statements section of our report. We are independent of the company in accordance with the ethical requirements that are relevant to our audit of the financial statements in the UK, including the FRC’s Ethical Standard, and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
Conclusions relating to going concern
In auditing the financial statements, we have concluded that the directors' use of the going concern basis of accounting in the preparation of the financial statements is appropriate.
Based on the work we have performed, we have not identified any material uncertainties relating to events or conditions that, individually or collectively, may cast significant doubt on the group's and parent company’s ability to continue as a going concern for a period of at least twelve months from when the financial statements are authorised for issue.
Our responsibilities and the responsibilities of the directors with respect to going concern are described in the relevant sections of this report.
Other information
The other information comprises the information included in the annual report other than the financial statements and our auditor's report thereon. The directors are responsible for the other information contained within the annual report. Our opinion on the financial statements does not cover the other information and, except to the extent otherwise explicitly stated in our report, we do not express any form of assurance conclusion thereon. Our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the course of the audit, or otherwise appears to be materially misstated. If we identify such material inconsistencies or apparent material misstatements, we are required to determine whether this gives rise to a material misstatement in the financial statements themselves. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact.
We have nothing to report in this regard.
Opinions on other matters prescribed by the Companies Act 2006
In our opinion, based on the work undertaken in the course of our audit:
the information given in the strategic report and the directors' report for the financial year for which the financial statements are prepared is consistent with the financial statements; and
the strategic report and the directors' report have been prepared in accordance with applicable legal requirements.
In the light of the knowledge and understanding of the group and the parent company and 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.
As explained more fully in the directors' responsibilities statement, the directors are responsible for the preparation of the financial statements and for being satisfied that they give a true and fair view, and for such internal control as the directors determine is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error. In preparing the financial statements, the directors are responsible for assessing the parent company's ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the directors either intend to liquidate the company or to cease operations, or have no realistic alternative but to do so.
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor's report that includes our opinion. Reasonable assurance is a high level of assurance but is not a guarantee that an audit conducted in accordance with ISAs (UK) will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements.
Irregularities, including fraud, are instances of non-compliance with laws and regulations. We design procedures in line with our responsibilities, outlined above, to detect material misstatements in respect of irregularities, including fraud. The extent to which our procedures are capable of detecting irregularities, including fraud, is detailed below.
As part of our planning process:
We enquired of management the systems and controls the company has in place, the areas of the financial statements that are most susceptible to the risk of irregularities and fraud, and whether there was any known, suspected or alleged fraud. The company did not inform us of any known, suspected or alleged fraud.
We obtained an understanding of the legal and regulatory frameworks applicable to the company. We determined that the following were most relevant: FRS 102, Companies Act 2006.
We considered the incentives and opportunities that exist in the company, including the extent of management bias, which present a potential for irregularities and fraud to be perpetuated, and tailored our risk assessment accordingly.
Using our knowledge of the company, together with the discussions held with the company at the planning stage, we formed a conclusion on the risk of misstatement due to irregularities including fraud and tailored our procedures according to this risk assessment.
The key procedures we undertook to detect irregularities including fraud during the course of the audit included:
Identifying and testing journal entries and the overall accounting records, in particular those that were significant and unusual;
Reviewing the financial statement disclosures and determining whether accounting policies have been appropriately applied;
Reviewing and challenging the assumptions and judgements used by management in their significant accounting estimates, in particular in relation to valuation of investment property and recoverability of amounts due from group undertakings;
Assessing the extent of compliance, or lack of, with the relevant laws and regulations;
Testing key revenue lines, in particular cut-off, for evidence of management bias;
Confirming the existence of key assets;
Obtaining third-party confirmation of material bank balances;
Documenting and verifying all significant related party balances and transactions;
Testing all material consolidation adjustments.
Owing to the inherent limitations of an audit, there is an unavoidable risk that we may not have detected some material misstatements in the financial statements even though we have properly planned and performed our audit in accordance with auditing standards. The primary responsibility for the prevention and detection of irregularities and fraud rests with the directors.
A further description of our responsibilities is available on the Financial Reporting Council’s website at: https://www.frc.org.uk/auditorsresponsibilities. This description forms part of our auditor's report.
Other matters which we are required to address
The corresponding figures for the year ended 31 May 2022 were not audited.
Use of our report
This report is made solely to the company’s members, as a body, in accordance with Chapter 3 of Part 16 of the Companies Act 2006. Our audit work has been undertaken so that we might state to the company’s members those matters we are required to state to them in an auditor's report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the company and the company’s members as a body, for our audit work, for this report, or for the opinions we have formed.
As permitted by s408 Companies Act 2006, the company has not presented its own profit and loss account and related notes. The company’s profit for the year was £1,271,441 (2022 - £74,569 profit).
Electric Group Holdings Limited (“the company”) is a private limited company domiciled and incorporated in England and Wales. The registered office is Electric Brixton, Town Hall Parade, Brixton Hill, London, United Kingdom, SW2 1RJ.
The group consists of Electric Group Holdings Limited and all of its subsidiaries.
These financial statements have been prepared in accordance with FRS 102 “The Financial Reporting Standard applicable in the UK and Republic of Ireland” (“FRS 102”) and the requirements of the Companies Act 2006.
The financial statements are prepared in sterling, which is the functional currency of the company. Monetary amounts in these financial statements are rounded to the nearest £.
The financial statements have been prepared under the historical cost convention, modified to include the revaluation of investment properties. The principal accounting policies adopted are set out below.
The company is a qualifying entity for the purposes of FRS 102, being a member of a group where the parent of that group prepares publicly available consolidated financial statements, including this company, which are intended to give a true and fair view of the assets, liabilities, financial position and profit or loss of the group. The company has therefore taken advantage of exemptions from the following disclosure requirements for parent company information presented within the consolidated financial statements:
Section 4 ‘Statement of Financial Position’: Reconciliation of the opening and closing number of shares;
Section 7 ‘Statement of Cash Flows’: Presentation of a statement of cash flow and related notes and disclosures;
Section 11 ‘Basic Financial Instruments’ and Section 12 ‘Other Financial Instrument Issues’: Carrying amounts, interest income/expense and net gains/losses for each category of financial instrument; basis of determining fair values;
Section 33 ‘Related Party Disclosures’: Compensation for key management personnel.
The consolidated group financial statements consist of the financial statements of the parent company Electric Group Holdings Limited together with all entities controlled by the parent company (its subsidiaries).
All financial statements are made up to 31 May 2023. Where necessary, adjustments are made to the financial statements of subsidiaries to bring the accounting policies used into line with those used by other members of the group.
All intra-group transactions, balances and unrealised gains on transactions between group companies are eliminated on consolidation.
Subsidiaries are consolidated in the group’s financial statements from the date that control commences until the date that control ceases.
The group has net current liabilities of £1,141,048 as at 31 May 2023. The group received funds post year end in excess of the net current liability as at 31 May 2023 from an insurance settlement of £1,223,006. The group have achieved profit post year end, and are forecasting further profits and therefore are forecasting sufficient funds to be able to continue trading at expected levels.
However, a number of provisions are recognised as at 31 May 2023. The group has the financial backing of one its directors who is providing support for a period of at least 12 months after the approval of these financial statements so the company and group can meet any liabilities which may fall due.
Accordingly, and having been satisfied that such support is available, at the time of approving the financial statements, the directors have a reasonable expectation that the group has adequate resources to continue in operational existence for the foreseeable future. Thus the directors continue to adopt the going concern basis of accounting in preparing the financial statements.
Turnover is derived from operating music venues and leasing of investment properties and arose wholly in the United Kingdom. Turnover is recognised when services have been rendered. The turnover is primarily derived from venue hire fees, ticket sales and beverage sales. Turnover is all rendered of goods and services.
Turnover from leasing of investment property represents rental income, property insurance premiums and service charges excluding value added tax. Recognition of rental income takes into account the terms of the lease including any lease incentives which are spread over the length of the lease.
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 AT and other sales related taxes.
The gain or loss arising on the disposal of an asset is determined as the difference between the sale proceeds and the carrying value of the asset, and is recognised in the profit and loss account.
Equity investments are measured at fair value through profit or loss, except for those equity investments that are not publicly traded and whose fair value cannot otherwise be measured reliably, which are recognised at cost less impairment until a reliable measure of fair value becomes available.
In the parent company financial statements, investments in subsidiaries are initially measured at cost and subsequently measured at cost less any accumulated impairment losses.
A subsidiary is an entity controlled by the group. Control is the power to govern the financial and operating policies of the entity so as to obtain benefits from its activities.
At each reporting period end date, the group reviews the carrying amounts of its tangible and intangible assets to determine whether there is any indication that those assets have suffered an impairment loss. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment loss (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.
The carrying amount of the investments accounted for using the equity method is tested for impairment as a single asset. Any goodwill included in the carrying amount of the investment is not tested separately for impairment.
The group has elected to apply the provisions of Section 11 ‘Basic Financial Instruments’ and Section 12 ‘Other Financial Instruments Issues’ of FRS 102 to all of its financial instruments.
Financial instruments are recognised in the group's balance sheet when the group becomes party to the contractual provisions of the instrument.
Financial assets and liabilities are offset and 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, 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.
Financial assets, other than those held at fair value through profit and loss, are assessed for indicators of impairment at each reporting end date.
Financial assets are impaired where there is objective evidence that, as a result of one or more events that occurred after the initial recognition of the financial asset, the estimated future cash flows have been affected. If an asset is impaired, the impairment loss is the difference between the carrying amount and the present value of the estimated cash flows discounted at the asset’s original effective interest rate. The impairment loss is recognised in profit or loss.
If there is a decrease in the impairment loss arising from an event occurring after the impairment was recognised, the impairment is reversed. The reversal is such that the current carrying amount does not exceed what the carrying amount would have been, had the impairment not previously been recognised. The impairment reversal is recognised in profit or loss.
Financial assets are derecognised only when the contractual rights to the cash flows from the asset expire or are settled, or when the group transfers the financial asset and substantially all the risks and rewards of ownership to another entity, or if some significant risks and rewards of ownership are retained but control of the asset has transferred to another party that is able to sell the asset in its entirety to an unrelated third party.
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 group after deducting all of its liabilities.
Basic financial liabilities, including creditors and borrowings are initially recognised at transaction price unless the arrangement constitutes a financing transaction, where the debt instrument is measured at the present value of the future payments discounted at a market rate of interest. Financial liabilities classified as payable within one year are not amortised.
Debt instruments are subsequently carried at amortised cost, using the effective interest rate method.
Trade creditors are obligations to pay for goods or services that have been acquired in the ordinary course of business from suppliers. Amounts payable are classified as current liabilities if payment is due within one year or less. If not, they are presented as non-current liabilities. Trade creditors are recognised initially at transaction price and subsequently measured at amortised cost using the effective interest method.
Financial liabilities are derecognised when the group's contractual obligations expire or are discharged or cancelled.
Equity instruments issued by the group are recorded at the proceeds received, net of transaction costs. Dividends payable on equity instruments are recognised as liabilities once they are no longer at the discretion of the group.
The tax expense represents the sum of the tax currently payable and deferred tax.
The tax currently payable is based on taxable profit for the year. Taxable profit differs from net profit as reported in the profit and loss account because it excludes items of income or expense that are taxable or deductible in other years and it further excludes items that are never taxable or deductible. The group’s liability for current tax is calculated using tax rates that have been enacted or substantively enacted by the reporting end date.
Deferred tax liabilities are generally recognised for all timing differences and deferred tax assets are recognised to the extent that it is probable that they will be recovered against the reversal of deferred tax liabilities or other future taxable profits. Such assets and liabilities are not recognised if the timing difference arises from goodwill or from the initial recognition of other assets and liabilities in a transaction that affects neither the tax profit nor the accounting profit.
The carrying amount of deferred tax assets is reviewed at each reporting end date and reduced to the extent that it is no longer probable that sufficient taxable profits will be available to allow all or part of the asset to be recovered. Deferred tax is calculated at the tax rates that are expected to apply in the period when the liability is settled or the asset is realised. Deferred tax is charged or credited in the profit and loss account, except when it relates to items charged or credited directly to equity, in which case the deferred tax is also dealt with in equity. Deferred tax assets and liabilities are offset if, and only if, there is a legally enforceable right to offset current tax assets and liabilities and the deferred tax assets and liabilities relate to taxes levied by the same tax authority.
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.
Payments to defined contribution retirement benefit schemes are charged as an expense as they fall due.
Rentals payable under operating leases, including any lease incentives received, are charged to 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 leased asset are consumed.
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.
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.
In the application of the group’s accounting policies, the directors are required to make judgements, estimates and assumptions about the carrying amount of assets and liabilities that are not readily apparent from other sources. The estimates and associated assumptions are based on historical experience and other factors that are considered to be relevant. Actual results may differ from these estimates.
The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised where the revision affects only that period, or in the period of the revision and future periods where the revision affects both current and future periods.
The following judgements (apart from those involving estimates) have had the most significant effect on amounts recognised in the financial statements.
At the end of each financial year, the directors assess investments in subsidiaries for any indicators of impairment. The performance of the subsidiaries has been reviewed and based on the performance during the year and post year end, as well as consideration of the fair value of leasehold properties held at costs in the subsidiary accounts, the directors consider there to be no indicators of impairment.
Amounts owed from the group are assessed for the recoverability of the balance. The directors have assessed the recoverability of this balance based on the trading results and forecasts of the group undertakings. Net present value calculations have been used and in considering the recoverability of the intercompany debtor which have been sensitised for movement in WACC as well as growth and RPI %. The directors consider amounts due from one of its subsidiaries to not be recoverable and these have been provided for in these accounts. The bad debt provision against the amounts due from the company's subsidiary is £2,557,429 (2022: £nil). The directors deem that the future trading potential of group companies, along with the intention to put charges in place over the freehold properties, all other amounts are deemed fully recoverable.
The estimates and assumptions which have a significant risk of causing a material adjustment to the carrying amount of assets and liabilities are as follows.
The directors have carried out an assessment of useful life of goodwill and it has been determined that 10 years is an appropriate amortisation policy.
Goodwill is tested for impairment annually and whenever events or changes in circumstances indicate that the carrying amount of goodwill has been impaired, for example due to a changed business climate. In order to determine if the value of goodwill has been impaired, the group relied on a number of factors, including historical results, business plans, forecasts and market data. Changes in the conditions for these judgements and estimate can significantly affect the assessed value of goodwill and its recoverable amount.
Investment properties are valued at fair value with changes in fair value being recognised in the profit and loss account. The fair value of the investment property has been arrived at on the basis of a valuation carried out in August 2024 by an independent third party valuation expert, with the effective date of the valuation being 31 May 2023. At the balance sheet date of 31 May 2023, the investment property has been revalued to £1,435,000. Determining the fair value of investment properties involves an element of estimation by referring to available market evidence, including rental yields and realised sales values for similar properties.
Freehold land and buildings are held at cost less depreciation and impairment. In August 2024 an independent third party valuation expert undertook valuation of the freehold land and buildings with the effective date of the valuation being 31 May 2023. At the balance sheet date of 31 May 2023, the freehold land and buildings were valued at £2,900,000, and therefore an impairment has been recognised against freehold land and buildings of £1,928,603. Determining the fair value of freehold land and buildings involves an element of estimation by referring to available market evidence, including rental yields and realised sales values for similar properties.
Provisions have been recognised relating to dilapidations in respect of the lease the group are entered into. The dilapidations relate to wear and tear which has accumulated over the course of the lease. An independent third party expert has completed their assessment of the dilapidation works to be completed and which are estimated to be of £110,000, which has been provided for in these financial statements.
As at 31 May 2023, a provision is recognised for amounts of £650,000 (2022: £650,000) in relation to compensation payable to a tenant at one of the properties owned by the group at the end of the lease period, being 23 March 2023. The compensation relates to works completed by the tenant on a number of individual improvements, as outlined in the lease agreement. On entering into the lease, the cost of carrying out the improvement works was valued by an independent third party, which has been adjusted for current value at the balance sheet date. A provision has been recognised as at 31 May 2023 for this amount, and a prior year adjustment recognised. Please see note 26 for further details.
A provision has been recognised in the period for amounts of £132,854 (2022: £Nil) being the best estimate of the directors for additional amounts payable in relation to the property development works undertaken during the period. The directors have reviewed available information and information from suppliers in determining the figure.
A provision has been recognised for amounts of £650,000 (2022: £nil) relating to compensation payable to a tenant on demise of the lease for improvement works completed by the tenant, as agreed upon when entering into the lease. The lease end date was 25 March 2023.
The average monthly number of persons (including directors) employed by the group and company during the year was:
Their aggregate remuneration comprised:
The actual charge for the year can be reconciled to the expected charge for the year based on the profit or loss and the standard rate of tax as follows:
Impairment tests have been carried out where appropriate and the following impairment losses have been recognised in profit or loss:
Impairment losses have been recognised within the profit and loss account against freehold land and buildings. Freehold land and buildings are held in the accounts at historic cost, and based on valuations completed in the period there were indicators for impairment. Therefore an impairment has been recognised against freehold land and buildings of £1,928,603.
More information on impairment movements in the year is given in note 12.
The fair value of the investment properties has been arrived at on the basis of a valuation made at 31 May 2023 by Gerald Eve, who are not connected with he company. The valuation was made on an open market value basis by reference to market evidence of transaction prices for similar properties.
The historic cost of the investment property held by the company as at 31 May 2023 is £627,144 (2022: £623,844).
On 25 September 2022, an investment property owned by the group became owner-occupied and therefore was transferred to freehold land and buildings within tangible fixed assets.
Details of the company's subsidiaries at 31 May 2023 are as follows:
Registered office addresses (all UK unless otherwise indicated):
The group have drawn borrowings from a company which is owned by one of the directors. Interest is being charged at a rate of 8%. There is no formal agreement for the timing of repayment.
Tenant compensation
As at 31 May 2023, a provision has been recognised for £650,000 (2022: £650,000) in relation to compensation payable to the tenant at the end of the lease period, being 23 March 2023, for works completed by the tenant on a number of individual improvements, as outlined in the lease agreement.
Costs relating to property development
A provision has been recognised in the period for amounts of £132,854 (2022: £Nil) being the best estimate of the directors for additional amounts payable in relation to the property development works undertaken during the period. The directors have reviewed available information and information from suppliers in determining the figure.
The following are the major deferred tax liabilities and assets recognised by the group and company, and movements thereon:
A defined contribution pension scheme is operated for all qualifying employees. The assets of the scheme are held separately from those of the group in an independently administered fund.
At the reporting end date the group had outstanding commitments for future minimum lease payments under non-cancellable operating leases, which fall due as follows:
During the preparation of the financial statements, management identified errors in the prior period figures. These have been corrected and further details are set out below.
In 2013, the company paid £175,000 to be assigned a lease from which a group company operates. The cost was capitalised as investment property despite the lease being an operating lease, and therefore an adjustment has been posted to recognise the lease premium as leasehold land and buildings to be depreciated over the life of the lease.
A prior period adjustment has been made to recognise a provision for compensation payable to a tenant upon the demise of the lease. This provision should have been recognised in prior periods when the repairs were done to the property and the compensation agreement was entered into.
The group’s investment property should have been stated at fair value as required by accounting standards. A prior year adjustment has been made to account for the fair value movement, with a related adjustment to deferred tax.
The group have drawn borrowings from a company which is owned by one of the directors. Advances were received of £1.75m of which £150,000 is still outstanding at 31 May 2023. Interest has accrued on the loan of £54,597 which are still owed as at 31 May 2023.
During the year, the group held an event for a company owned by the father of one the directors. Total income received from the event was £78,500 (2022: £nil). The group received project management advice relating to a building refurbishment from the related party for the amounts of £23,313 (2022: £22,835). As at 31 May 2023, there were amounts owed from the related party of £nil (2022: £9,516).
For the financial year ended 31 May 2023, the company's subsidiary, Latenight Investments Limited, was entitled to exemption from audit under section 479A of the Companies Act 2006.
The net outstanding liabilities which the company has guaranteed pursuant to s479A and s479C of the Companies Act 2006 amounted to £906. These liabilities are already incorporated in the consolidated financial statements.
On 8 August 2023 the group received £1,223,006 in an insurance settlement following a fire at the Bristol venue in 2021.