Company Registration No. 11926262 (England and Wales)
4WALL HOLDINGS UK LIMITED
ANNUAL REPORT AND FINANCIAL STATEMENTS
FOR THE YEAR ENDED
31 DECEMBER 2021
31 December 2021
4WALL HOLDINGS UK LIMITED
COMPANY INFORMATION
Directors
W Bailey
M Morris
R Walker
(Appointed 12 February 2021)
Company number
11926262
Registered office
Unit E & F Glenfield Business Park
Phillips Road
Blackburn
Lancashire
BB1 5PF
Auditor
Rickard Luckin Limited
1st Floor
County House
100 New London Road
Chelmsford
Essex
CM2 0RG
4WALL HOLDINGS UK LIMITED
CONTENTS
Page
Strategic report
1 - 3
Directors' report
4 - 5
Independent auditor's report
6 - 9
Group statement of comprehensive income
10
Group balance sheet
11
Company balance sheet
12
Group statement of changes in equity
13
Company statement of changes in equity
14
Group statement of cash flows
15
Notes to the financial statements
16 - 33
4WALL HOLDINGS UK LIMITED
STRATEGIC REPORT
FOR THE YEAR ENDED 31 DECEMBER 2021
- 1 -

The directors present the strategic report for the year ended 31 December 2021.

Overall Assessment

The consolidated group accounts for 4Wall Holdings UK Ltd comprise the main trading entity (4Wall Entertainment UK Ltd) and the holding company (4Wall Holdings UK Ltd). The holding company does not trade, but simply holds the investment in 4Wall Entertainment UK Ltd and the associated loan with the group parent company that has funded all UK acquisitions to date.

 

As such, the group accounts need to be viewed with this context in mind; that being that there is a significant intercompany loan and associated interest charge, resulting in a notable P&L loss and overall Net Liabilities.

 

It should also be noted that from 1 January 2021 the Company’s Blackburn and Harlow operations merged to fall within 4Wall Entertainment UK Ltd. Further, the prior period was 16 months and as such, the prior year figures cannot be compared on a like for like basis.

 

With strong, underlying profitability and a positive, growing EBITDA, management are satisfied that the core business is in a good position to continue this positive trajectory. At the point of writing, 2022 has seen significant year on year growth in the first 3 months of trading, and it is management’s expectation that 2022 performance will show a marked improvement on 2021.

 

Fair Review of the Business

The effects of the COVID-19 pandemic continued to be felt throughout 2021 by businesses globally. As a business who operates in the events sectors, our business practices have been significantly impacted by government restrictions on large gatherings and international travel.

 

Due to government lockdown or restrictions, the vast majority of all ‘in-person’ events that we would have supplied AV to from January 2021 to May 2021 were cancelled or postponed, which has impacted revenue negatively. Our revenue during this period was almost exclusively virtual services or from retail or permanent installations, demonstrating the importance of the diversification we have worked to achieve. Events began to return from June 2021, albeit at a lower level compared to pre COVID-19.

 

Acquisition update

Despite the continuing impact of COVID-19 making it difficult to fully harness the value of the synergies available through the new ownership structure, in 2021 there were some great examples of value that has been driven by the new structure. We expect the number of these to grow in 2022:

 

Strategic Partnership

In 2021 4Wall Entertainment UK Limited has formed a close working relationship with Transition Video who supply video solutions to tours, festivals, broadcast and television. This has further broadened the range of services 4Wall offer and will provide great opportunities for cross pollination of clients and cross selling of services in 2022.

 

4WALL HOLDINGS UK LIMITED
STRATEGIC REPORT (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2021
- 2 -
Development and performance

In 2021 we completed the installation of our permanent Studio, Studio 19, at the Royal Lancaster hotel. This replaces the temporary studio we installed in 2020 and which continued to operate for the first half of 2021. Studio 19 has already hosted several client Events and has a strong pipeline of confirmed jobs and client demos going into 2022. Our Studio 19 facility puts us in a strong competitive position to capitalize on client behavioural changes towards virtual formats.

 

The business undertook a successful cost cutting exercise in 2020 to keep operating losses to a minimum. We started 2021 by continuing to operate at this reduced cost level, but since then we have selectively invested in order to capitalize on market opportunities and to enhance our strong market position. Investments included the set-up of Studio-19, new hardware as required and building a strategic partnership with Transition Video. Going into 2022 we are investing in staff with new hires, which will allow us to drive revenue and profit growth.

 

Key performance indicators

 

12 months ended 31 Dec 21

16 months ended 31 Dec 20

Change

Turnover

11,191,982

4,029,598

7,162,384

 

 

 

 

 

 

 

 

EBITDA (exc. Exceptional Items)

1,344,761

(1,624,072)

2,968,833

 

 

 

Turnover for 2021 was stunted by Covid in the first 7 months of the year, but picked up significantly from the end of July, driven by the return of events. Overall the 12 month period ended 31 Dec 21 was 178% up on the 16 month period ended 31 December 2020.

 

EBITDA (excluding exceptional items) is arguably the most critical indicator to management of the business’ core underlying performance and ability to generate positive cashflows. In order that this metric most closely reflects the underlying core business performance, we have excluded the following when arriving at this figure: exceptional costs associated with the acquisition of Smart AV (such as rebranding), exchange rate gains/losses and fair value revaluations of financial instruments.

 

EBITDA (excluding exceptional items was £1,344,761 (2020 16 months: -£1,624,072). In the context of the adverse trading conditions the company has faced in the period, the directors see this as a very positive outcome and a sign of how resilient the business has been.

4WALL HOLDINGS UK LIMITED
STRATEGIC REPORT (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2021
- 3 -
Principle Risks & Uncertainties

Covid 19

The largest risk to the business is the continuing uncertainty surrounding the impact of COVID-19 on the future of trade shows and conferences. However, because we have diversified and have a range of virtual offerings that we have delivered for over a year, we can offer our clients relevant AV services no matter the format of the event. Whether in person, virtual or indeed hybrid, we have a range of solutions that we can offer our client base. With the successful vaccine program and booster roll out we have seen an increase in consumer confidence and expect an increase in trade show and conference activity in 2022.

 

Exchange Rate Risk

The majority of our equipment purchases are made in dollars, and as such there are times in the year where the business is susceptible to exchange rate movements. Management utilise forward contracts to mitigate such risks where necessary.

 

Equipment Failure or Loss

The company’s hire fleet comprises equipment which is subject to the risk of mechanical or electronic failure, theft or damage. These risks are mitigated through appropriate maintenance and quality control programs, as well as the existence of various insurance policies.

 

Credit Risk

Whilst credit risk is something that exists in any business, it is tightly controlled by our finance team and we do not believe that any one customer represents a material risk to the company in this regard.

 

Brexit

With the UK out of the European Union, the administrative process of transporting equipment into Europe on a temporary basis to service European based events is more complicated. However, through careful planning and strict adherence to customs regulations, we do not believe that this risk is material.

On behalf of the board

R Walker
Director
20 April 2022
4WALL HOLDINGS UK LIMITED
DIRECTORS' REPORT
FOR THE YEAR ENDED 31 DECEMBER 2021
- 4 -

The directors present their annual report and financial statements for the year ended 31 December 2021.

Principal activities

The principal activity of the group continued to be that of the provision and management of audio visual equipment at major conferences, events and exhibitions worldwide. The group has also developed a retail offering for permanent installations of such equipment.

Results and dividends

The results for the year are set out on page 10.

No ordinary dividends were paid. The directors do not recommend payment of a final dividend.

Directors

The directors who held office during the year and up to the date of signature of the financial statements were as follows:

W Bailey
M Morris
R Walker
(Appointed 12 February 2021)
SW Stuart
(Resigned 12 February 2021)
Auditor

Rickard Luckin Limited were appointed as auditor to the company 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.

Statement of directors' responsibilities

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

 

 

The directors are responsible for keeping adequate accounting records that are sufficient to show and explain the group’s and company’s transactions and disclose with reasonable accuracy at any time the financial position of the group and 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 company and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.

Statement of disclosure to auditor

So far as each person who was a director at the date of approving this report is aware, there is no relevant audit information of which the auditor of the company is unaware. Additionally, the directors individually have taken all the necessary steps that they ought to have taken as directors in order to make themselves aware of all relevant audit information and to establish that the auditor of the company is aware of that information.

4WALL HOLDINGS UK LIMITED
DIRECTORS' REPORT (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2021
- 5 -
On behalf of the board
R Walker
Director
20 April 2022
4WALL HOLDINGS UK LIMITED
INDEPENDENT AUDITOR'S REPORT
TO THE MEMBERS OF 4WALL HOLDINGS UK LIMITED
- 6 -
Opinion

We have audited the financial statements of 4Wall Holdings UK Limited (the 'parent company') and its subsidiaries (the 'group') for the year ended 31 December 2021 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).

In our opinion the financial statements:

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:

4WALL HOLDINGS UK LIMITED
INDEPENDENT AUDITOR'S REPORT (CONTINUED)
TO THE MEMBERS OF 4WALL HOLDINGS UK LIMITED
- 7 -
Matters on which we are required to report by exception

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:

 

Responsibilities of directors

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.

Auditor's 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.

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.

Capability of the audit in detecting irregularities, including fraud

We identified areas of laws and regulations that could reasonably be expected to have a material effect on the financial statements from our: general commercial and sector experience; through verbal and written communications with those charged with governance and other management, and via inspection of the group’s regulatory and legal correspondence.

We discussed with those charged with governance and other management the policies and procedures regarding compliance with laws and regulations.

We communicated identified laws and regulations to our team and remained alert to any indicators of non-compliance throughout the audit, we also specifically considered where and how fraud may occur within the group.

The potential effect of these laws and regulations on the financial statements varies considerably.

Firstly, the group is subject to laws and regulations that directly affect the financial statements, including: the company’s constitution; relevant financial reporting standards; company law; tax legislation and distributable profits legislation and we assess the extent of compliance with these laws and regulations as part of our procedures on the related financial statement items.

4WALL HOLDINGS UK LIMITED
INDEPENDENT AUDITOR'S REPORT (CONTINUED)
TO THE MEMBERS OF 4WALL HOLDINGS UK LIMITED
- 8 -

Secondly the group is subject to many other laws and regulations where the consequences of non-compliance could have a material effect on the amounts or disclosures in the financial statements, for instance through the imposition of fines and penalties, or through losses arising from litigations. We identified the following areas as those most likely to have such an affect: employment legislation; health and safety legislation; GDPR; anti-bribery and anti-corruption legislation.

ISAs (UK) limit the required procedures to identify non-compliance with these laws and regulations to the procedures, and no procedures over and above those already noted are required. These limited procedures did not identify any actual or suspected non-compliance which laws and regulations that could have a material impact on the financial statements.

In relation to fraud, we performed the following specific procedures in addition to those already noted:

These procedures did not identify any actual or suspected fraudulent irregularity that could have a material impact on the financial statements.

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 ISAs (UK). For example, the further removed non-compliance with laws and regulations is from the events and transactions reflected in the financial statements, the less likely the procedures that we are required to undertake would identify it. In addition, as with any audit, there remains a high risk of non-detection of irregularities, as these might involve collusion, forgery, intentional omissions, misrepresentation, or the override of internal controls. We are not responsible for preventing non-compliance with laws and regulations or fraud, and cannot be expected to detect non-compliance with all laws and regulations or every incidence of fraud.

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.

4WALL HOLDINGS UK LIMITED
INDEPENDENT AUDITOR'S REPORT (CONTINUED)
TO THE MEMBERS OF 4WALL HOLDINGS UK LIMITED
- 9 -

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.

Michael Breame (Senior Statutory Auditor)
For and on behalf of Rickard Luckin Limited
20 April 2022
Chartered Accountants
Statutory Auditor
1st Floor
County House
100 New London Road
Chelmsford
Essex
CM2 0RG
4WALL HOLDINGS UK LIMITED
GROUP STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEAR ENDED 31 DECEMBER 2021
- 10 -
2021
2020
Notes
£
£
Turnover
2
11,191,982
4,029,598
Cost of sales
(8,522,808)
(5,791,160)
Gross profit/(loss)
2,669,174
(1,761,562)
Administrative expenses
(6,633,152)
(3,972,744)
Other operating income
193,946
798,420
Operating loss
3
(3,770,032)
(4,935,886)
Interest receivable and similar income
7
3,136
82,085
Interest payable and similar expenses
8
(2,388,265)
(1,622,376)
Fair value gains/(losses) on financial instruments
9
(199,835)
401,219
Loss before taxation
(6,354,996)
(6,074,958)
Tax on loss
10
-
0
390,700
Loss for the financial year
(6,354,996)
(5,684,258)
The loss for the financial year is all attributable to the owners of the parent company.
Total comprehensive income for the year is all attributable to the owners of the parent company.
4WALL HOLDINGS UK LIMITED
GROUP BALANCE SHEET
AS AT 31 DECEMBER 2021
31 December 2021
- 11 -
2021
2020
Notes
£
£
£
£
Fixed assets
Goodwill
11
10,160,592
10,654,746
Tangible assets
12
8,671,054
10,012,252
18,831,646
20,666,998
Current assets
Stocks
15
65,987
222,696
Debtors
16
3,744,797
1,072,370
Cash at bank and in hand
2,602,614
2,672,409
6,413,398
3,967,475
Creditors: amounts falling due within one year
17
(6,467,051)
(3,240,870)
Net current (liabilities)/assets
(53,653)
726,605
Total assets less current liabilities
18,777,993
21,393,603
Creditors: amounts falling due after more than one year
18
(31,409,926)
(27,545,540)
Provisions for liabilities
Provisions
21
250,000
375,000
(250,000)
(375,000)
Net liabilities
(12,881,933)
(6,526,937)
Capital and reserves
Called up share capital
23
1
1
Profit and loss reserves
(12,881,934)
(6,526,938)
Total equity
(12,881,933)
(6,526,937)
The financial statements were approved by the board of directors and authorised for issue on 20 April 2022 and are signed on its behalf by:
20 April 2022
R Walker
Director
4WALL HOLDINGS UK LIMITED
COMPANY BALANCE SHEET
AS AT 31 DECEMBER 2021
31 December 2021
- 12 -
2021
2020
Notes
£
£
£
£
Fixed assets
Tangible assets
12
-
0
7,397,162
Investments
13
17,455,196
16,705,196
17,455,196
24,102,358
Current assets
Debtors
16
7,716,663
504,470
Cash at bank and in hand
5,446
637,233
7,722,109
1,141,703
Creditors: amounts falling due within one year
17
(1,663,953)
(2,198,708)
Net current assets/(liabilities)
6,058,156
(1,057,005)
Total assets less current liabilities
23,513,352
23,045,353
Creditors: amounts falling due after more than one year
18
(29,612,128)
(26,125,573)
Net liabilities
(6,098,776)
(3,080,220)
Capital and reserves
Called up share capital
23
1
1
Profit and loss reserves
(6,098,777)
(3,080,221)
Total equity
(6,098,776)
(3,080,220)

As permitted by s408 Companies Act 2006, the company has not presented its own profit and loss account and related notes. The company’s loss for the year was £3,018,556 (2020 - £2,237,544 loss).

These financial statements have been prepared in accordance with the provisions applicable to companies subject to the small companies regime.

The financial statements were approved by the board of directors and authorised for issue on 20 April 2022 and are signed on its behalf by:
20 April 2022
R Walker
Director
Company Registration No. 11926262
4WALL HOLDINGS UK LIMITED
GROUP STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 DECEMBER 2021
- 13 -
Share capital
Profit and loss reserves
Total
£
£
£
Balance at 1 January 2020
1
(842,680)
(842,679)
Year ended 31 December 2020:
Loss and total comprehensive income for the year
-
(5,684,258)
(5,684,258)
Balance at 31 December 2020
1
(6,526,938)
(6,526,937)
Year ended 31 December 2021:
Loss and total comprehensive income for the year
-
(6,354,996)
(6,354,996)
Balance at 31 December 2021
1
(12,881,934)
(12,881,933)
4WALL HOLDINGS UK LIMITED
COMPANY STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 DECEMBER 2021
- 14 -
Share capital
Profit and loss reserves
Total
£
£
£
Balance at 1 January 2020
1
(842,677)
(842,676)
Year ended 31 December 2020:
Loss and total comprehensive income for the year
-
(2,237,544)
(2,237,544)
Balance at 31 December 2020
1
(3,080,221)
(3,080,220)
Year ended 31 December 2021:
Loss and total comprehensive income for the year
-
(3,018,556)
(3,018,556)
Balance at 31 December 2021
1
(6,098,777)
(6,098,776)
4WALL HOLDINGS UK LIMITED
GROUP STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED 31 DECEMBER 2021
- 15 -
2021
2020
Notes
£
£
£
£
Cash flows from operating activities
Cash absorbed by operations
26
(567,789)
(436,260)
Interest paid
100,563
(47,358)
Income taxes refunded
100,850
390,700
Net cash outflow from operating activities
(366,376)
(92,918)
Investing activities
Purchase of tangible fixed assets
(2,247,961)
(3,720,294)
Proceeds on disposal of tangible fixed assets
313,069
286,581
Purchase of subsidiaries
-
(14,705,196)
Proceeds on disposal of subsidiaries
-
9,999
Payment against provisions
(125,000)
-
Interest received
3,136
29
Dividends received
-
0
82,056
Net cash used in investing activities
(2,056,756)
(18,046,825)
Financing activities
Proceeds from new lease arrangments
515,360
-
Proceeds of new bank loans
1,100,000
1,200,000
Repayment of bank loans
(125,000)
Proceeds of new other borrowings
1,749,018
17,526,537
Payment of finance leases obligations
(886,001)
(433,589)
Net cash generated from financing activities
2,353,377
18,292,948
Net (decrease)/increase in cash and cash equivalents
(69,755)
153,205
Cash and cash equivalents at beginning of year
2,672,369
2,519,164
Cash and cash equivalents at end of year
2,602,614
2,672,369
Relating to:
Cash at bank and in hand
2,602,614
2,672,409
Bank overdrafts included in creditors payable within one year
-
(40)
4WALL HOLDINGS UK LIMITED
NOTES TO THE GROUP FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2021
- 16 -
1
Accounting policies
Company information

4Wall Holdings UK Limited (“the company”) is a private limited company domiciled and incorporated in England and Wales. The registered office is .

 

The group consists of 4Wall Holdings UK Limited and all of its subsidiaries.

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.

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 certain financial instruments at fair value. 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:

 

1.2
Business combinations

In the parent company financial statements, the cost of a business combination is the fair value at the acquisition date of the assets given, equity instruments issued and liabilities incurred or assumed. The excess of the cost of a business combination over the fair value of the identifiable assets, liabilities and contingent liabilities acquired is recognised as goodwill. The cost of the combination includes the estimated amount of contingent consideration that is probable and can be measured reliably, and is adjusted for changes in contingent consideration after the acquisition date. Provisional fair values recognised for business combinations in previous periods are adjusted retrospectively for final fair values determined in the 12 months following the acquisition date. Investments in subsidiaries, joint ventures and associates are accounted for at cost less impairment.

1.3
Basis of consolidation

The consolidated group financial statements consist of the financial statements of the parent company 4Wall Holdings UK Limited together with all entities controlled by the parent company (its subsidiaries) and the group’s share of its interests in joint ventures and associates.

 

All financial statements are made up to 31 December 2021. 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. Unrealised losses are also eliminated unless the transaction provides evidence of an impairment of the asset transferred.

4WALL HOLDINGS UK LIMITED
NOTES TO THE GROUP FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2021
1
Accounting policies
(Continued)
- 17 -

Subsidiaries are consolidated in the group’s financial statements from the date that control commences until the date that control ceases.

1.4
Going concern

The company has reported a loss for the period after taxation of £6,354,996, resulting in an overall Net Liability position of £12,881,934. However, it must be noted that only c. £2m of that loss is driven by weaker trading resulting from the Covid 19 pandemic, with the rest being predominantly made up by Amortisation charged on Goodwill, and intercompany interest charged by the parent company. The Amortisation charge has no cash impact, and the intercompany loan is not repayable in the foreseeable future, and so management do not believe that either of these charges negatively impact the ability for the company to continue as a Going Concern. The company’s diversification into virtual event services and the returning confidence in events suggests a far more positive future outlook. The directors have made reasonable assumptions in forecasting future cash-flows through 2022 and beyond, working on scenarios which include a return to trading "normality".

 

At the time of approving the financial statements, the directors have a reasonable expectation that the company has sufficient resources to continue to operate for the foreseeable future. Thus the directors continue to adopt the going concern basis of accounting in preparing the financial statements.

1.5
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.

 

Audio visual technology rental and associated income is recognised over the period of the rental and where additional services are provided at the point at which 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 the permanent installation of audio visual equipment is recognised when the significant risks and rewards of ownership of the goods have passed to the buyer (usually on installation of the product), 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.

 

1.6
Intangible fixed assets - goodwill

Goodwill represents the excess of the cost of acquisition of a business 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 amortised over 5 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.

1.7
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.

4WALL HOLDINGS UK LIMITED
NOTES TO THE GROUP FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2021
1
Accounting policies
(Continued)
- 18 -

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:

Land and buildings leasehold
20% straight line
Assets for hire
20% straight line
Fixtures, fittings & equipment
25% straight line
Computer equipment
33% straight line
Motor vehicles
25% 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 recognised in the profit and loss account.

1.8
Fixed asset investments

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, associates and jointly controlled entities are initially measured at cost and subsequently measured at cost less any accumulated impairment losses.

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

An associate is an entity, being neither a subsidiary nor a joint venture, in which the company holds a long-term interest and where the company has significant influence. The group considers that it has significant influence where it has the power to participate in the financial and operating decisions of the associate.

 

Investments in associates are initially recognised at the transaction price (including transaction costs) and are subsequently adjusted to reflect the group’s share of the profit or loss, other comprehensive income and equity of the associate using the equity method. Any difference between the cost of acquisition and the share of the fair value of the net identifiable assets of the associate on acquisition is recognised as goodwill. Any unamortised balance of goodwill is included in the carrying value of the investment in associates.

 

Losses in excess of the carrying amount of an investment in an associate are recorded as a provision only when the company has incurred legal or constructive obligations or has made payments on behalf of the associate.

 

In the parent company financial statements, investments in associates are accounted for at cost less impairment.

Entities in which the group has a long term interest and shares control under a contractual arrangement are classified as jointly controlled entities.

1.9
Impairment of fixed assets

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.

4WALL HOLDINGS UK LIMITED
NOTES TO THE GROUP FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2021
1
Accounting policies
(Continued)
- 19 -

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.

1.10
Stocks

Stocks represent consumable goods held for resale and low value items used in the hire operations of the company, which are written off over their operational life of 3 years.

 

The accounting for short life "consumable" goods in this way applied to such purchases through until August 2020. From this date all new purchases of such goods are being individually recorded on the company asset register and written off over their useful economic life accordingly. The financial impact on the profit for the year to 31 December 2021 is therefore not materially different.

1.11
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.

1.12
Financial instruments

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

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.

4WALL HOLDINGS UK LIMITED
NOTES TO THE GROUP FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2021
1
Accounting policies
(Continued)
- 20 -
Other financial assets

Other financial assets, including investments in equity instruments which are not subsidiaries, associates or joint ventures, are initially measured at fair value, which is normally the transaction price. Such assets are subsequently carried at fair value and the changes in fair value are recognised in profit or loss, except that investments in equity instruments that are not publicly traded and whose fair values cannot be measured reliably are measured at cost less impairment.

Impairment of financial assets

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.

Derecognition of financial assets

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.

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 group 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. 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.

4WALL HOLDINGS UK LIMITED
NOTES TO THE GROUP FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2021
1
Accounting policies
(Continued)
- 21 -
Other financial liabilities

Derivatives, including interest rate swaps and forward foreign exchange contracts, are not basic financial instruments. Derivatives are initially recognised at fair value on the date a derivative contract is entered into and are subsequently re-measured at their fair value. Changes in the fair value of derivatives are recognised in profit or loss in finance costs or finance income as appropriate, unless hedge accounting is applied and the hedge is a cash flow hedge.

 

Debt instruments that do not meet the conditions in FRS 102 paragraph 11.9 are subsequently measured at fair value through profit or loss. Debt instruments may be designated as being measured at fair value through profit or loss to eliminate or reduce an accounting mismatch or if the instruments are measured and their performance evaluated on a fair value basis in accordance with a documented risk management or investment strategy.

Derecognition of financial liabilities

Financial liabilities are derecognised when the group's contractual obligations expire or are discharged or cancelled.

1.13
Equity instruments

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.

1.14
Taxation

The tax expense represents the sum of the tax currently payable and deferred tax.

Current 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

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.

4WALL HOLDINGS UK LIMITED
NOTES TO THE GROUP FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2021
1
Accounting policies
(Continued)
- 22 -
1.15
Provisions

Provisions are recognised when the group has a legal or constructive present obligation as a result of a past event, it is probable that the group will be required to settle that obligation and a reliable estimate can be made of the amount of the obligation.

 

The amount recognised as a provision is the best estimate of the consideration required to settle the present obligation at the reporting end date, taking into account the risks and uncertainties surrounding the obligation. Where the effect of the time value of money is material, the amount expected to be required to settle the obligation is recognised at present value. When a provision is measured at present value, the unwinding of the discount is recognised as a finance cost in profit or loss in the period in which it arises.

1.16
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.

1.17
Retirement benefits

Payments to defined contribution retirement benefit schemes are charged as an expense as they fall due.

1.18
Leases

Leases are classified as finance leases whenever the terms of the lease transfer substantially all the risks and rewards of ownership to the lessees. All other leases are classified as operating leases.

 

Assets held under finance leases are recognised as assets at the lower of the assets fair value at the date of inception and the present value of the minimum lease payments. The related liability is included in the balance sheet as a finance lease obligation. Lease payments are treated as consisting of capital and interest elements. The interest is charged to profit or loss so as to produce a constant periodic rate of interest on the remaining balance of the liability.

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.

1.19
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.

1.20
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.

4WALL HOLDINGS UK LIMITED
NOTES TO THE GROUP FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2021
- 23 -
2
Turnover and other revenue
2021
2020
£
£
Turnover analysed by class of business
Asset rental sales
10,015,179
3,487,437
New sales
1,176,803
542,161
11,191,982
4,029,598
2021
2020
£
£
Turnover analysed by geographical market
UK
9,152,004
3,851,782
Rest of the World
2,039,978
177,816
11,191,982
4,029,598
2021
2020
£
£
Other significant revenue
Interest income
3,136
29
Dividends received
-
82,056
Grants received
134,056
783,249
3
Operating loss
2021
2020
£
£
Operating loss for the year is stated after charging/(crediting):
Exchange differences apart from those arising on financial instruments measured at fair value through profit or loss
300,131
(1,447,736)
Government grants
(134,056)
(783,249)
Depreciation of owned tangible fixed assets
2,894,660
3,073,862
Depreciation of tangible fixed assets held under finance leases
364,994
687,728
Loss/(profit) on disposal of tangible fixed assets
16,436
(164,846)
Amortisation of intangible assets
1,244,154
968,613
Operating lease charges
780,162
473,552
4
Auditor's remuneration
2021
2020
Fees payable to the company's auditor and associates:
£
£
For audit services
Audit of the financial statements of the group and company
3,300
8,500
Audit of the financial statements of the company's subsidiaries
10,500
14,000
13,800
22,500
4WALL HOLDINGS UK LIMITED
NOTES TO THE GROUP FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2021
4
Auditor's remuneration
(Continued)
- 24 -

Comparative fees are for the standalone audit work on the parent company and the subsidiary company respectively and were undertaken by two different audit firms.

5
Employees

The average monthly number of persons (including directors) employed by the group and company during the year was:

Group
Company
2021
2020
2021
2020
Number
Number
Number
Number
Administration
15
21
-
7
Delivery/Operations
30
40
-
14
Sales
21
28
-
9
Total
66
89
-
0
30

Their aggregate remuneration comprised:

Group
Company
2021
2020
2021
2020
£
£
£
£
Wages and salaries
2,665,028
3,389,384
-
0
955,540
Social security costs
283,840
303,191
-
0
90,692
Pension costs
77,464
209,322
-
0
14,938
3,026,332
3,901,897
-
0
1,061,170
6
Directors' remuneration
2021
2020
£
£
Remuneration for qualifying services
166,545
269,489
Remuneration disclosed above includes the following amounts paid to the highest paid director:
2021
2020
£
£
Remuneration for qualifying services
n/a
125,989

As total directors' remuneration was less than £200,000 in the current year, no disclosure is provided for that year.

4WALL HOLDINGS UK LIMITED
NOTES TO THE GROUP FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2021
- 25 -
7
Interest receivable and similar income
2021
2020
£
£
Interest income
Interest on bank deposits
325
29
Other interest income
2,811
-
Total interest revenue
3,136
29
Income from fixed asset investments
Income from shares in group undertakings
-
0
82,056
Total income
3,136
82,085
8
Interest payable and similar expenses
2021
2020
£
£
Interest on bank overdrafts and loans
9,230
2,920
Other interest on financial liabilities
2,287,702
1,575,018
Interest on finance leases and hire purchase contracts
91,333
42,250
Other interest
-
2,188
Total finance costs
2,388,265
1,622,376
9
Fair value gains/(losses) on financial instruments
2021
2020
£
£
Fair value gains/(losses) on financial instruments
Change in value of financial liabilities held at fair value through profit or loss
(199,835)
401,219
10
Taxation
2021
2020
£
£
Current tax
UK corporation tax on profits for the current period
-
0
(247,729)
Adjustments in respect of prior periods
-
0
(142,971)
Total current tax
-
0
(390,700)
4WALL HOLDINGS UK LIMITED
NOTES TO THE GROUP FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2021
10
Taxation
(Continued)
- 26 -

The actual charge/(credit) for the year can be reconciled to the expected credit for the year based on the profit or loss and the standard rate of tax as follows:

2021
2020
£
£
Loss before taxation
(6,354,996)
(6,074,958)
Expected tax credit based on the standard rate of corporation tax in the UK of 19.00% (2020: 19.00%)
(1,207,449)
(1,154,242)
Tax effect of expenses that are not deductible in determining taxable profit
49,803
2,410
Gains not taxable
-
0
(1,900)
Change in unrecognised deferred tax assets
774,834
896,861
Adjustments in respect of prior years
-
0
(142,971)
Permanent capital allowances in excess of depreciation
139,198
(100,022)
Depreciation on assets not qualifying for tax allowances
7,225
7,943
Amortisation on assets not qualifying for tax allowances
236,389
184,036
Tax effect of income not taxable in determining taxable profit
-
0
(91,822)
Other permanent differences
-
0
9,007
Taxation charge/(credit)
-
(390,700)
11
Intangible fixed assets
Group
Goodwill
£
Cost
At 1 January 2021
11,623,359
Adjustments relating to deferred consideration
750,000
At 31 December 2021
12,373,359
Amortisation and impairment
At 1 January 2021
968,613
Amortisation charged for the year
1,244,154
At 31 December 2021
2,212,767
Carrying amount
At 31 December 2021
10,160,592
At 31 December 2020
10,654,746
The company had no intangible fixed assets at 31 December 2021 or 31 December 2020.

Earn out payments relating to the acquisition of a group company in the prior year were revised. This has resulted in an increase in the goodwill of £750,000.

4WALL HOLDINGS UK LIMITED
NOTES TO THE GROUP FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2021
- 27 -
12
Tangible fixed assets
Group
Land and buildings leasehold
Assets for hire
Fixtures, fittings & equipment
Computer equipment
Motor vehicles
Total
£
£
£
£
£
£
Cost
At 1 January 2021
281,577
17,164,796
328,785
228,355
190,124
18,193,637
Additions
16,515
2,128,999
55,614
43,687
3,146
2,247,961
Disposals
-
0
(636,990)
-
0
-
0
-
0
(636,990)
At 31 December 2021
298,092
18,656,805
384,399
272,042
193,270
19,804,608
Depreciation and impairment
At 1 January 2021
208,229
7,535,136
160,457
172,331
105,232
8,181,385
Depreciation charged in the year
38,024
3,104,299
58,567
21,238
37,526
3,259,654
Eliminated in respect of disposals
-
0
(307,485)
-
0
-
0
-
0
(307,485)
At 31 December 2021
246,253
10,331,950
219,024
193,569
142,758
11,133,554
Carrying amount
At 31 December 2021
51,839
8,324,855
165,375
78,473
50,512
8,671,054
At 31 December 2020
73,348
9,629,660
168,328
56,024
84,892
10,012,252
Company
Assets for hire
Fixtures, fittings & equipment
Motor vehicles
Total
£
£
£
£
Cost
At 1 January 2021
9,962,219
185,389
29,095
10,176,703
Disposals
(9,962,219)
(185,389)
(29,095)
(10,176,703)
At 31 December 2021
-
0
-
0
-
0
-
0
Depreciation and impairment
At 1 January 2021
2,704,244
63,932
11,365
2,779,541
Eliminated in respect of disposals
(2,704,244)
(63,932)
(11,365)
(2,779,541)
At 31 December 2021
-
0
-
0
-
0
-
0
Carrying amount
At 31 December 2021
-
0
-
0
-
0
-
0
At 31 December 2020
7,257,975
121,457
17,730
7,397,162
4WALL HOLDINGS UK LIMITED
NOTES TO THE GROUP FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2021
12
Tangible fixed assets
(Continued)
- 28 -

The net carrying value of tangible fixed assets includes the following in respect of assets held under finance leases or hire purchase contracts.

Group
Company
2021
2020
2021
2020
£
£
£
£
Assets for hire
1,046,866
1,126,922
-
0
-
0
13
Fixed asset investments
Group
Company
2021
2020
2021
2020
Notes
£
£
£
£
Investments in subsidiaries
14
-
0
-
0
17,455,196
16,705,196

The assets of the parent company were transferred to its trading subsidiary on 1 January 2021.

 

Earn out payments relating to the acquisition of a group company in the prior year were revised. This has resulted in an additional investment of £750,000 on the company balance sheet and an equivalent adjustment to Goodwill at Group level.

Movements in fixed asset investments
Company
Shares in subsidiaries
£
Cost or valuation
At 1 January 2021
16,705,196
Adjustment to earn out
750,000
At 31 December 2021
17,455,196
Carrying amount
At 31 December 2021
17,455,196
At 31 December 2020
16,705,196
14
Subsidiaries

Details of the company's subsidiaries at 31 December 2021 are as follows:

Name of undertaking
Registered office
Class of
% Held
shares held
Direct
4Wall Entertainment UK Limited
1st Floor County House, 100 New London Road, Chelmsford, Essex, United Kingdom, CM2 0RG
Ordinary
100.00
4WALL HOLDINGS UK LIMITED
NOTES TO THE GROUP FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2021
- 29 -
15
Stocks
Group
Company
2021
2020
2021
2020
£
£
£
£
Finished goods and goods for resale
65,987
222,696
-
0
-
0
16
Debtors
Group
Company
2021
2020
2021
2020
Amounts falling due within one year:
£
£
£
£
Trade debtors
2,921,775
603,728
26,975
356,253
Corporation tax recoverable
-
0
100,850
-
0
-
0
Other debtors
173,318
149,168
45,568
-
0
Prepayments and accrued income
649,704
218,624
62,307
148,217
3,744,797
1,072,370
134,850
504,470
Amounts falling due after more than one year:
Amounts owed by group undertakings
-
-
7,581,813
-
Total debtors
3,744,797
1,072,370
7,716,663
504,470
17
Creditors: amounts falling due within one year
Group
Company
2021
2020
2021
2020
Notes
£
£
£
£
Bank loans and overdrafts
19
820,000
300,040
-
0
40
Obligations under finance leases
20
640,223
851,882
-
0
-
0
Trade creditors
1,856,223
342,726
142,197
296,099
Amounts owed to group undertakings
301,018
101
-
0
-
0
Other taxation and social security
669,529
456,595
-
48,182
Other creditors
1,570,624
926,355
1,508,334
1,781,582
Accruals and deferred income
609,434
363,171
13,422
72,805
6,467,051
3,240,870
1,663,953
2,198,708

Amounts owed to group undertakings on the Group balance sheet are amounts owed to the parent company of 4Wall Holdings UK Limited, a company incorporated in the USA, which does not form part of this consolidated UK group.

4WALL HOLDINGS UK LIMITED
NOTES TO THE GROUP FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2021
- 30 -
18
Creditors: amounts falling due after more than one year
Group
Company
2021
2020
2021
2020
Notes
£
£
£
£
Bank loans and overdrafts
19
1,355,000
900,000
-
0
-
0
Obligations under finance leases
20
360,985
519,967
-
0
-
0
Other borrowings
19
28,645,325
24,526,792
28,563,512
24,526,792
Other creditors
1,048,616
1,598,781
1,048,616
1,598,781
31,409,926
27,545,540
29,612,128
26,125,573

Other borrowings include £28,563,512 (2020: £24,526,792) which is due to the parent company, 4Wall Entertainment Inc.

19
Loans and overdrafts
Group
Company
2021
2020
2021
2020
£
£
£
£
Bank loans
2,175,000
1,200,000
-
0
-
0
Bank overdrafts
-
0
40
-
0
40
Loans from group undertakings
28,645,325
24,526,792
28,563,512
24,526,792
30,820,325
25,726,832
28,563,512
24,526,832
Payable within one year
820,000
300,040
-
0
40
Payable after one year
30,000,325
25,426,792
28,563,512
24,526,792

Bank loans relate to loans taken out with National Westminster Bank Plc under the Coronavirus Large Business Interruption Loan scheme (CLBIL) and the Recovery Loan Scheme. These loans are secured by a debenture on the assets of the trading subsidiary.

Loans from the group undertakings are not due for repayment until at least 12 months from the date of these financial statements.

20
Finance lease obligations
Group
Company
2021
2020
2021
2020
£
£
£
£
Future minimum lease payments due under finance leases:
Within one year
640,223
851,882
-
0
-
0
In two to five years
360,985
519,967
-
0
-
0
1,001,208
1,371,849
-
-
4WALL HOLDINGS UK LIMITED
NOTES TO THE GROUP FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2021
20
Finance lease obligations
(Continued)
- 31 -

Finance lease payments represent rentals payable by the company for certain items of plant and machinery. Leases include purchase options at the end of the lease period, and no restrictions are placed on the use of the assets. All leases are on a fixed repayment basis and no arrangements have been entered into for contingent rental payments. The lease obligations are secured by fixed charges on the assets to which they relate.

21
Provisions for liabilities
Group
Company
2021
2020
2021
2020
£
£
£
£
Deferred consideration
250,000
375,000
-
-
Movements on provisions:
Deferred consideration
Group
£
At 1 January 2021
375,000
Utilisation of provision
(125,000)
At 31 December 2021
250,000

Provisions are balances owed for further revenue costs in relation to a company acquisition from a previous year where the recognition criteria for provisions are met.

22
Retirement benefit schemes
2021
2020
Defined contribution schemes
£
£
Charge to profit or loss in respect of defined contribution schemes
77,464
209,322

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.

23
Share capital
Group and company
2021
2020
2021
2020
Ordinary share capital
Number
Number
£
£
Issued and fully paid
Ordinary of 1p each
100
100
1
1
4WALL HOLDINGS UK LIMITED
NOTES TO THE GROUP FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2021
- 32 -
24
Operating lease commitments
Lessee

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:

Group
Company
2021
2020
2021
2020
£
£
£
£
Within one year
694,354
643,832
400,000
400,000
Between two and five years
1,952,272
2,596,044
1,400,000
1,833,333
2,646,626
3,239,876
1,800,000
2,233,333
25
Related party transactions

The Group has an intercompany loan with their US parent company totalling £28,563,512. The original loan is denominated in US dollars and therefore any exchange gains/losses arising are reflected accordingly in these financial statements. The loan is charged interest at a rate of 8.75%.

26
Cash absorbed by group operations
2021
2020
£
£
Loss for the year after tax
(6,354,996)
(5,684,257)
Adjustments for:
Taxation charged/(credited)
-
0
(390,700)
Finance costs
2,388,265
1,622,376
Investment income
(3,136)
(82,085)
Loss/(gain) on disposal of tangible fixed assets
16,436
(164,846)
Profit on disposal of subsidiary
-
(9,999)
Amortisation and impairment of intangible assets
1,244,154
968,613
Depreciation and impairment of tangible fixed assets
3,259,654
3,846,409
Change in fair value
199,835
(401,219)
(Decrease)/increase in provisions
(125,000)
375,000
Movements in working capital:
Decrease in stocks
156,709
192,629
(Increase)/decrease in debtors
(1,778,617)
1,987,813
Increase/(decrease) in creditors
428,907
(2,695,994)
Cash absorbed by operations
(567,789)
(436,260)
4WALL HOLDINGS UK LIMITED
NOTES TO THE GROUP FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2021
- 33 -
27
Analysis of changes in net debt - group
1 January 2021
Cash flows
31 December 2021
£
£
£
Cash at bank and in hand
2,672,409
(69,795)
2,602,614
Bank overdrafts
(40)
40
-
0
2,672,369
(69,755)
2,602,614
Borrowings excluding overdrafts
(25,726,792)
(5,093,533)
(30,820,325)
Obligations under finance leases
(1,371,849)
370,641
(1,001,208)
(24,426,272)
(4,792,647)
(29,218,919)
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