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Registered number: 12976435
CONDUIT CLUB LIMITED
FINANCIAL STATEMENTS
INFORMATION FOR FILING WITH THE REGISTRAR
FOR THE YEAR ENDED 31 DECEMBER 2022
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CONDUIT CLUB LIMITED
REGISTERED NUMBER: 12976435
BALANCE SHEET
AS AT 31 DECEMBER 2022
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Debtors: amounts falling due after more than one year
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Debtors: amounts falling due within one year
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Creditors: amounts falling due within one year
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Total assets less current liabilities
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Creditors: amounts falling due after more than one year
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CONDUIT CLUB LIMITED
REGISTERED NUMBER: 12976435
BALANCE SHEET (CONTINUED)
AS AT 31 DECEMBER 2022
The financial statements have been prepared in accordance with the provisions applicable to companies subject to the small companies regime and in accordance with the provisions of FRS 102 Section 1A - small entities.
The financial statements have been delivered in accordance with the provisions applicable to companies subject to the small companies regime.
The Company has opted not to file the statement of comprehensive income in accordance with provisions applicable to companies subject to the small companies' regime.
The financial statements were approved and authorised for issue by the board and were signed on its behalf on 26 September 2023.
The notes on pages 3 to 14 form part of these financial statements.
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CONDUIT CLUB LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
The Conduit Club Limited is a private company, limited by shares incorporated in England and Wales under the Companies Act 2006. The address of the registered office is 9 Bonhill Street, London, England, EC2A 4DJ.
2.Accounting policies
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Basis of preparation of financial statements
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The financial statements have been prepared under the historical cost convention unless otherwise specified within these accounting policies and in accordance with Section 1A of Financial Reporting Standard 102, the Financial Reporting Standard applicable in the UK and the Republic of Ireland and the Companies Act 2006.
The following principal accounting policies have been applied:
In assessing the going concern position the Directors have considered the company’s cashflow, liquidity and business activities.
As part of the going concern assessment the Directors have prepared forecasts for a minimum period of twelve months from the date of approval of the financial statements. The forecasts prepared used a conservative approach to membership growth & retention.
Upon consideration of this analysis and the principal risks faced by the business, the Directors are satisfied that the company has adequate resources to continue in operation for the foreseeable future.
In addition, the company has in place a facility with The Conduit HoldCo Limited to access a further £1m of financing should it need it. Post year end the company has borrowed £300k, although this is currently under a separate loan agreement so the £1m remains available in full.
Therefore, the Directors have concluded that it is appropriate to prepare these financial statements on a going concern basis.
Revenue is recognised to the extent that it is probable that the economic benefits will flow to the Company and the revenue can be reliably measured. Revenue is measured as the fair value of the consideration received or receivable, excluding value added tax and other sales taxes. Revenue is generated from membership fees, impact partnerships, food and beverage sales, and events / room hire. Membership and impact partnership revenue is recognised over the period it relates to. Food and beverage sales are recognised at the point of sale. Events / room hire revenue is recognised when the service is delivered.
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Operating leases: the Company as lessee
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Rentals paid under operating leases are charged to profit or loss on a straight-line basis over the lease term.
Benefits received and receivable as an incentive to sign an operating lease are recognised on a straight-line basis over the lease term, unless another systematic basis is representative of the time pattern of the lessee's benefit from the use of the leased asset.
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CONDUIT CLUB LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
2.Accounting policies (continued)
Tangible fixed assets under the cost model are stated at historical cost less accumulated depreciation and any accumulated impairment losses. Historical cost includes expenditure that is directly attributable to bringing the asset to the location and condition necessary for it to be capable of operating in the manner intended by management.
Depreciation is charged so as to allocate the cost of assets less their residual value over their estimated useful lives, using the straight-line method.
Depreciation is provided on the following basis:
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Long-term leasehold property
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The assets' residual values, useful lives and depreciation methods are reviewed, and adjusted prospectively if appropriate, or if there is an indication of a significant change since the last reporting date.
Gains and losses on disposals are determined by comparing the proceeds with the carrying amount and are recognised in profit or loss.
Stocks are stated at the lower of cost and net realisable value, being the estimated selling price less costs to complete and sell. Cost is based on the cost of purchase on a weighted average basis.
At each balance sheet date, stocks are assessed for impairment. If stock is impaired, the carrying amount is reduced to its selling price less costs to complete and sell. The impairment loss is recognised immediately in profit or loss.
Short-term debtors are measured at transaction price, less any impairment. Loans receivable are measured initially at fair value, net of transaction costs, and are measured subsequently at amortised cost using the effective interest method, less any impairment.
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Cash and cash equivalents
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Cash is represented by cash in hand and deposits with financial institutions repayable without penalty on notice of not more than 24 hours. Cash equivalents are highly liquid investments that mature in no more than three months from the date of acquisition and that are readily convertible to known amounts of cash with insignificant risk of change in value.
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CONDUIT CLUB LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
2.Accounting policies (continued)
The Company only enters into basic financial instrument transactions that result in the recognition of financial assets and liabilities like trade and other debtors and creditors, loans from banks and other third parties, loans to related parties and investments in ordinary shares.
Short-term creditors are measured at the transaction price. Other financial liabilities, including bank loans, are measured initially at fair value, net of transaction costs, and are measured subsequently at amortised cost using the effective interest method.
Finance costs are charged to profit or loss over the term of the debt using the effective interest method so that the amount charged is at a constant rate on the carrying amount. Issue costs are initially recognised as a reduction in the proceeds of the associated capital instrument.
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Foreign currency translation
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Functional and presentation currency
The Company's functional and presentational currency is GBP.
Transactions and balances
Foreign currency transactions are translated into the functional currency using the spot exchange rates at the dates of the transactions.
At each period end foreign currency monetary items are translated using the closing rate. Non-monetary items measured at historical cost are translated using the exchange rate at the date of the transaction and non-monetary items measured at fair value are measured using the exchange rate when fair value was determined.
Defined contribution pension plan
The Company operates a defined contribution plan for its employees. A defined contribution plan is a pension plan under which the Company pays fixed contributions into a separate entity. Once the contributions have been paid the Company has no further payment obligations.
The contributions are recognised as an expense in profit or loss when they fall due. Amounts not paid are shown in accruals as a liability in the Balance sheet. The assets of the plan are held separately from the Company in independently administered funds.
All borrowing costs are recognised in profit or loss in the year in which they are incurred.
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CONDUIT CLUB LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
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Judgments in applying accounting policies and key sources of estimation uncertainty
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The following accounting policies involve judgement and provide sources of estimation uncertainty:
Convertible Debt
The company has issued convertible debt during the year. A discount rate of 11% has been used to calculate the split between debt and equity as required under FRS102. 11% is an estimate based on management's best estimate of the rate that applied to the company at the time the debt was issued. If the actual rate was higher than the estimate, there could be a material impact on the accounts that would increase other reserves and decrease non-current liabilities.
Impairment of fixed assets
Following an impairment assessment at the reporting date, management calculated the recoverable amount of each cash generating unit, after confirming indicators of impairment were present. In calculating the recoverable amount, management calculated the value in use which involved the discounting of future cash flows at an appropriate discount rate. A discount rate of 20% is an estimate based on management's judgement. If the actual rate was higher than the estimate, there could be a material impact on the accounts that would decrease the carrying amount of fixed assets and reserves, following an impairment charge.
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The average monthly number of employees, including directors, during the year was 98 (2021 - 32).
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CONDUIT CLUB LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
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Long-term leasehold property
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Charge for the year on owned assets
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CONDUIT CLUB LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
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Due after more than one year
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Amounts owed by owners with a participating interest
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Prepayments and accrued income
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Other debtors due after more than one year relate to the rental deposit that is repayable when the lease comes to an end, subject to deduction of any costs.
Amounts owed by owners with a participating interest (greater than 20% ownership held) are interest free and repayable on demand.
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CONDUIT CLUB LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
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Creditors: Amounts falling due within one year
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Other loans with participating interests
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Amounts owed to related parties
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Amounts owed to owners with a participating interest
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Other taxation and social security
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Accruals and deferred income
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Amounts owed to owners with a participating interest (greater than 20% ownership held) and related parties are interest free and repayable on demand.
Included with other loans with participating interests are three loans. A £145,000 (2021 - £145,000) loan which was unsecured, interest-free and repayable on demand as at 31 December 2022 and 26 December 2021. Post year end on 13 January this remained unsecured and interest-free but became repayable on 31 December 2024. A £80,000 (2021 - £nil) loan which is unsecured, had an interest rate of 2% per annum and is repayable in July 2023. A £300,000 (2021 - £nil) loan which is unsecured that was due for repayment on 25 November 2022. As it is now overdue penalty interest of 5% per annum is being charged. See note 14 for post balance sheet events where this debt was converted to equity.
Included within other creditors is £498,000 (2021 - £500,000) relating to payments the company has
committed to pay by way of ex gratia payments to support the Directors / Management team of the
previous Conduit Club. The amounts are due to be paid in 2023 (2021 - £250,000 due in 2022 and £250,000 due in 2023)
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CONDUIT CLUB LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
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Creditors: Amounts falling due after more than one year
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Convertible loan notes with participating interests
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Accruals and deferred income
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The convertible loans notes are due for repayment, or can be converted to equity until December 2024. Interest is charged at 10% per annum. The convertible loan notes with participating interests (greater than 20% ownership held) are due for repayment, or can be converted until 31 May 2024. They carry interest at 5% per annum. See note 15 for post balance sheet events where the convertible loan notes with participating interests were converted to equity.
Included within other creditors is £nil (2021 - £250,000) relating to payments the company has committed to pay by way of ex gratia payments to support the Directors / Management team of the previous Conduit Club.
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The Company operates a defined contributions pension scheme. The assets of the scheme are held separately from those of the those of the Company in an independently administered fund. The pension cost charge represents contributions payable by the Company to the fund and amounted to £85,895 (2021 - £55,574) for the period to 31 December 2022. £20,796 (2021 - £1,038) was owed at the year end.
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The comparative figures in the financial statements have been restated to incorporate the impact of the material misstatements. Net assets as at 26 December 2021 had previously been stated at £113,483. Following the adjustments laid out below, net assets at at 26 December 2021 are restated as £313,088.
In the prior year items in the Balance sheet and Statement of Comprehensive Income were misstated due to errors and misclassification of items across the balances noted below. These errors have been corrected so that the balances at 26 December 2021 reflect the correct values. The impact of these adjustments is noted in the below table.
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CONDUIT CLUB LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
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Adjustment 1
As at 26 December 2021, a balance of £146,221 was held within other debtors and other creditors. These amounts were not a liability nor an asset and therefore they have been reversed out of the current assets and current liabilities as at 26 December 2021.
Adjustment 2
A £51,577 other debtor was recognised when the amount should have been shown net of other liabilities. This amount related to payroll that was paid and the other liabilities were not reduced accordingly. Other debtors have been reduced and other liabilities have been reduced as at 26 December 2021 by this value.
Adjustment 3
Adjustment relates to the re-classification of 2 loans from due greater than one year to due within one year. As there were no signed agreements in place as at 26 December 2021 the loans were deemed repayable on demand and as such, re-classified. The loan values were £53,500 and £145,000.
Adjustment 4
Adjustment relates to re-classification of loan, originally recognised as at 26 December 2021 within amounts owed to owners with participating interest. Balance of £315,073 should have been recognised within amounts owed to related parties.
Adjustment 5
As at 26 December 2021, a balance of £87,732 was held within other creditors. This balance related to £656 of cash received for shares issued and should have been recognised as £656 within share capital and £87,076 in share premium. An adjustment has therefore been made to credit share capital and share premium, and debit other creditors.
Adjustment 6
As at 26 December 2021, a balance of £295,738 was incorrectly held within accruals and deferred income. This was re-classified to other creditors.
Adjustment 7
Business rate expenses of £72,691 were over accrued as at 26 December 2021. An adjustment has been made to debit accruals and credit administrative expenses to correct this.
Adjustment 8
Utility expenses of £39,182 were over accrued as at 26 December 2021. An adjustment has been made to to debit accruals and credit administrative expenses to correct this.
Adjustment 9
As at 26 December 2021 a non-current rent free accrual balance of £555,556 was incorrectly classified as a current accrual. This has been re-classified as a non-current accrual.
Adjustment 10
Re-classification of other loan balance of £133,750 as at 26 December 2021 to convertible loan notes as this was incorrectly classified.
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CONDUIT CLUB LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
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CONDUIT CLUB LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
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Related party transactions
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Notes 7&9 disclose amounts owed to / from owners with a participating interest in the company which are interest free and repayable on demand. Notes 9&10 disclose loans and convertible debt owed to owners with a participating interest in the company.
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Post balance sheet events
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In February 2023 the company drew down £250k in relation to the convertible loan note in place as of 1 December 2022, taking the total amount to £1,000,000 being the maximum under this agreement.
On 24 February 2023 the company signed and investment agreement with The Conduit Holdco Limited and issued and allotted:
- 4,517,500 of ordinary share capital of £0.0001 nominal value. This share capital was partly paid for through the capitalisation of amounts owed to The Conduit Holdco Limited (amounts disclosed in notes 9&10 and the unpaid intellectual property (IP) fees disclosed as amounts owed to participating interests at the year end). The balance was paid through the settlement of a one off IP fee charge, as covered below in the amended IP agreement section.
- 17,772 of ordinary share capital of £0.0001 nominal value. This share capital was paid for through the capitalisation of accrued interest owed to The Conduit Holdco Limited.
- 250,000 of ordinary share capital of £0.0001 nominal value paid for in cash.
The issue and allotment of shares to The Conduit Holdco Limited, combined with changes to the company's articles means that means as of 24 February 2023 The Conduit Holdco Limited is now the ultimate controlling party.
As part of the investment agreement there is a further £732,000 available for Conduit Club Limited to request from The Conduit Holdco Limited in equity if and when required. This expires 31 August 2023.
On 24 February 2023 the original IP agreement for the use of the Conduit brand (between Conduit Club Limited and Conduit Holdco Limited) was cancelled and replaced with a new agreement meaning the company has paid a fixed amount for use of the brand. As part of this agreement £472,500 of fees included in current creditors at 31 December 2022 and administrative expenses were capitalised as equity.
On 24 February 2023 the company signed an agreement for a second convertible loan with The Conduit Holdco Limited for up to £1,000,000. The loan is repayable on 31 May 2024 or at a later date if agreed between the borrower and the lender, or it can be converted to ordinary shares up until this date. There is no interest payable on this loan.
On 5 April 2023 a £300,000 loan was drawn with The Conduit Holdco Limited. This loan is repayable by 31 August 2023, is interest free. If not repaid by 31 August 2023, the amount will be considered as drawn from the £732,000 remaining equity as noted above, that remains available under the investment agreement.
At 31 December 2022 there was no ultimate controlling party. As of 24 February 2023 The Conduit Holdco Limited is now the ultimate controlling party.
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CONDUIT CLUB LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
The auditors' report on the financial statements for the year ended 31 December 2022 was qualified.
The qualification in the audit report was as follows:
We were not appointed as auditors of the company until after 26 December 2021 and thus did not observe the counting of physical inventories at this date. We were unable to satisfy ourselves by alternative means concerning the inventory quantities held at 26 December 2021, which are stated in the balance sheet at £155,645. Consequently we were unable to determine whether any adjustment to this amount was necessary.
The audit report was signed on 26 September 2023 by Isabelle Shepherd (Senior statutory auditor) on behalf of Haysmacintyre LLP.
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