Company Registration No. 13558953 (England and Wales)
Arc Media Holdings Limited
Annual report and financial statements
for the year ended 31 December 2022
Arc Media Holdings Limited
Company information
Directors
Simon Foster
Andrew Crow
(Appointed 29 October 2022)
Claire Kraft
(Appointed 23 August 2023)
Company number
13558953
Registered office
Unit 4 Fulwood Park
Caxton Road
Fulwood
Preston
PR2 9NZ
Independent auditor
BDO LLP
55 Baker Street
London
W1U 7EU
Arc Media Holdings Limited
Contents
Page
Strategic report
1
Directors' report
2 - 4
Independent auditor's report
5 - 9
Statement of comprehensive income
10
Statement of financial position
11
Statement of changes in equity
12
Notes to the financial statements
13 - 29
Arc Media Holdings Limited
Strategic report
For the year ended 31 December 2022
Page 1
The directors present the strategic report for the year ended 31 December 2022. The Company was incorporated on 10 August 2021. Accordingly, the prior year financial statements were prepared for the period from incorporation to 31 December 2021.
Fair review of the business
The principal activity of the Company was that of an investment holding company.
The Company generated £nil (2021: £nil) revenue and a loss before tax for the year of £2,833k (2021: £1,037k).
At the balance sheet date, the Company had net assets of £141,961k (2021: £25,899) following significant acquisitions made in the year as referenced in note 11 of the financial statements .
Principal risks and uncertainties
The principal risk facing the Company can be broadly classified as financial. The directors have measures in place in order to mitigate such risks and will continue to work on these.
Potential risk- Besides the usual business risk, the Company continues to monitor and manage the impact from the current cost of living crisis within the economy. Input cost pressures are being managed as much as possible and management charges will be reviewed.
Key performance indicators
The financial results for the Company are set out on page 10.
The directors do not believe there are any Key Performance Indicators for the Company as an investment and management company that can only generate revenue from its group.
Simon Foster
Director
2 November 2023
Arc Media Holdings Limited
Directors' report
For the year ended 31 December 2022
Page 2
The directors present their annual report and financial statements for the year ended 31 December 2022. The Company was incorporated on 10 August 2021. Accordingly, the prior year financial statements were prepared for the period from incorporation to 31 December 2021.
Principal activities
The principal activity of the company during the period was that of an investment holding company.
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:
Anup Bagaria
(Resigned 29 October 2022)
Simon Foster
Robert Gray
(Resigned 29 October 2022)
Amanda Ratner
(Resigned 29 October 2022)
Michael Struble
(Resigned 29 October 2022)
David Joseph
(Resigned 1 January 2022)
Andrew Crow
(Appointed 29 October 2022)
Claire Kraft
(Appointed 23 August 2023)
Post reporting date events
Since 31 December 2022, the Company has made two acquisitions:
On 22 May 2023, the company acquired Marketing in Partnership Limited ("MiP"), which is a leading provider of outsourced marketing services, events and content to the UK asset management sector.
On 9 June 2023, the company acquired Renewable Energy Events Limited, which operates a portfolio of events and media assets serving the sustainable farming sector, including Low Carbon Agriculture.
The aggregate net initial consideration paid for these acquisitions was £12.1 million which was funded by a combination of debt and the issue of equity shares by Arc Investco Limited, the Company's ultimate parent company. There are earn out arrangements in place under which additional consideration will become payable up to a maximum of £6.2 million if certain earnings targets are met.
Auditor
BDO LLP 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.
Arc Media Holdings Limited
Directors' report (continued)
For the year ended 31 December 2022
Page 3
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 company and of the profit or loss of the company for that period. In preparing these financial statements, the directors are required to:
select suitable accounting policies and then apply them consistently;
make judgements and accounting estimates that are reasonable and prudent;
state whether applicable UK Accounting Standards have been followed, subject to any material departures disclosed and explained in the financial statements;
prepare the financial statements on the going concern basis unless it is inappropriate to presume that the company will continue in business.
The directors are responsible for keeping adequate accounting records that are sufficient to show and explain the company’s transactions and disclose with reasonable accuracy at any time the financial position of the company and enable them to ensure that the financial statements comply with the Companies Act 2006. They are also responsible for safeguarding the assets of the company and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.
Strategic report
The Company has chosen in accordance with Companies Act 2006, s. 414C(11) to set out in the Group's strategic report information required by Large and Medium-sized Companies and Groups (Accounts and Reports) Regulations 2008, Sch. 7 to be contained in the directors' report. It has done so in respect of the Business review, Principal Risk and Uncertainties and Financial Key Performance Indicator sections.
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 company’s auditor 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 company’s auditor is aware of that information.
Going concern
The Company is in a net asset position and meets its day to day working capital requirements through the performance of its investments and intercompany balances. The company is financially supported by Arc Investco Limited which has confirmed that it will continue to provide ongoing financial support for the company for the foreseeable future and a period of at least 12 months plus one day from the issuance of the financial statements.
In respect of the intercompany loan balance of £12,264,442 due to Group Undertakings, confirmation has been obtained that repayment of the balances will not be demanded or sought unless the company has the financial resources available to do so. On the basis of this assessment, the directors consider that the company has adequate resources to operate for the foreseeable future, and as such, has adopted the going concern basis in preparing these financial statements.
Arc Media Holdings Limited
Directors' report (continued)
For the year ended 31 December 2022
Page 4
On behalf of the board
Simon Foster
Director
2 November 2023
Arc Media Holdings Limited
Independent auditor's report
To the member of Arc Media Holdings Limited
Page 5
Opinion
In our opinion the financial statements:
give a true and fair view of the state of the Company’s affairs as at 31 December 2022 and of its loss for the year then ended;
have been properly prepared in accordance with United Kingdom Generally Accepted Accounting Practice; and
have been prepared in accordance with the requirements of the Companies Act 2006.
We have audited the financial statements of Arc Media Holdco Limited (“the Company”) for the year ended 31 December 2022 which comprise the Statement of comprehensive income, the Statement of financial position, the Statement of changes in equity and notes to the financial statements, including a summary of significant accounting policies. The financial reporting framework that has been applied in their preparation is applicable law and United Kingdom Accounting Standards, including Financial Reporting Standard 102 The Financial Reporting Standard applicable in the UK and Republic of Ireland (United Kingdom Generally Accepted Accounting Practice).
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 believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
Independence
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.
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 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.
Arc Media Holdings Limited
Independent auditor's report (continued)
To the member of Arc Media Holdings Limited
Page 6
The directors are responsible for the other information. The other information comprises the information included in the Directors report and financial statements other than the financial statements and our auditor’s report thereon. Our opinion on the financial statements does not cover the other information and, except to the extent otherwise explicitly stated in our report, we do not express any form of assurance conclusion thereon.
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.
Other Companies Act 2006 reporting
In our opinion, based on the work undertaken in the course of the 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 Company and its environment obtained in the course of the audit, we have not identified material misstatements in the Directors’ report.
We have nothing to report in respect of the following matters in relation to which the Companies Act 2006 requires us to report to you if, in our opinion:
adequate accounting records have not been kept, or returns adequate for our audit have not been received from branches not visited by us; or
the financial statements are not in agreement with the accounting records and returns; or
certain disclosures of Directors’ remuneration specified by law are not made; or
we have not received all the information and explanations we require for our audit.
Responsibilities of directors
As explained more fully in the 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 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.
Arc Media Holdings Limited
Independent auditor's report (continued)
To the member of Arc Media Holdings Limited
Page 7
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.
Extent to which the audit was capable of detecting irregularities, including fraud
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:
Non-compliance with laws and regulations
Based on:
Our understanding of the Company and the industry in which it operates;
Discussion with management and those charged with governance; and
Obtaining and understanding of the Company’s policies and procedures regarding compliance with laws and regulations.
We considered the significant laws and regulations to be Financial Reporting Standard 102 The Financial Reporting Standard applicable in the UK and Republic of Ireland (United Kingdom Generally Accepted Accounting Practice), the Companies Act of 2006, Data Protection Act 2018, General Data Protection Regulation (GDPR), and UK tax legislation.
The Company is also subject to laws and regulations where the consequence of non-compliance could have a material effect on the amount or disclosures in the financial statements, for example through the imposition of fines or litigations. We identified such laws and regulations to be regulations such as National Insurance and VAT requirements.
Our procedures in respect of the above included:
Review of minutes of meeting of those charged with governance for any instances of non-compliance with laws and regulations;
Review of correspondence with tax authorities for any instances of non-compliance with laws and regulations;
Review of financial statement disclosures and agreeing to supporting documentation;
Agreed audited financial statement figures to the tax computation prepared by management’s tax preparer and recalculated key tax figures; and
Review of legal expenditure accounts to understand the nature of expenditure incurred.
Arc Media Holdings Limited
Independent auditor's report (continued)
To the member of Arc Media Holdings Limited
Page 8
Fraud
We assessed the susceptibility of the financial statements to material misstatement, including fraud. Our risk assessment procedures included:
Enquiry with management and those charged with governance regarding any known or suspected instances of fraud;
Obtaining an understanding of the Company’s policies and procedures relating to:
Review of minutes of meeting of those charged with governance for any known or suspected instances of fraud;
Discussion amongst the engagement team as to how and where fraud might occur in the financial statements;
Performing analytical procedures to identify any unusual or unexpected relationships that may indicate risks of material misstatement due to fraud; and
Considering remuneration incentive schemes and performance targets and the related financial statement areas impacted by these.
Based on our risk assessment, we considered the area most susceptible to fraud to be management override of controls.
Our procedures in respect of the above included:
Testing a sample of journal entries throughout the year, which met a defined risk criteria, by agreeing to supporting documentation;
Assessing significant estimates made by management for bias; and
We also communicated relevant identified laws and regulations and potential fraud risks to all engagement team members who were all deemed to have appropriate competence and capabilities and remained alert to any indications of fraud or non-compliance with laws and regulations throughout the audit.
Our audit procedures were designed to respond to risks of material misstatement in the financial statements, recognising that the risk of not detecting a material misstatement due to fraud is higher than the risk of not detecting one resulting from error, as fraud may involve deliberate concealment by, for example, forgery, misrepresentations or through collusion. There are inherent limitations in the audit procedures performed and the further removed non-compliance with laws and regulations is from the events and transactions reflected in the financial statements, the less likely we are to become aware of it.
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.
Arc Media Holdings Limited
Independent auditor's report (continued)
To the member of Arc Media Holdings Limited
Page 9
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.
Peter Smithson (Senior Statutory Auditor)
For and on behalf of BDO LLP, Statutory Auditor
London, UK
3 November 2023
55 Baker Street
London
W1U 7EU
BDO LLP is a limited liability partnership registered in England and Wales (with registered number OC305127).
Arc Media Holdings Limited
Statement of comprehensive income
For the year ended 31 December 2022
Page 10
Year
Period
ended
ended
31 December
31 December
2022
2021
Notes
£
£
Administrative expenses
(3,847,470)
(1,037,087)
Interest receivable and similar income
7
1,870,191
Interest payable and similar expenses
8
(855,241)
Loss before taxation
(2,832,520)
(1,037,087)
Tax on loss
9
68,548
Loss for the financial year
(2,832,520)
(968,539)
The income statement has been prepared on the basis that all operations are continuing operations.
There was no other comprehensive income for 2022 (2021: £nil).
The notes on pages 13 to 29 form part of these financial statements.
Arc Media Holdings Limited
Statement of financial position
As at 31 December 2022
Page 11
2022
2021
Notes
£
£
£
£
Fixed assets
Tangible assets
10
2,724
Investments
11
197,381,219
29,031,348
197,383,943
29,031,348
Current assets
Debtors
13
4,411,096
1,880,796
Cash at bank and in hand
44,375
4,455,471
1,880,796
Creditors: amounts falling due within one year
14
(17,002,591)
(5,012,900)
Net current liabilities
(12,547,120)
(3,132,104)
Total assets less current liabilities
184,836,823
25,899,244
Creditors: amounts falling due after more than one year
15
(42,875,373)
Net assets
141,961,450
25,899,244
Capital and reserves
Called up share capital
18
7
3
Share premium account
145,762,502
26,867,780
Profit and loss reserves
(3,801,059)
(968,539)
Total equity
141,961,450
25,899,244
The notes on pages 13 to 29 form part of these financial statements.
The financial statements were approved by the board of directors and authorised for issue on 2 November 2023 and are signed on its behalf by:
Simon Foster
Director
Company Registration No. 13558953 (England and Wales)
Arc Media Holdings Limited
Statement of changes in equity
For the year ended 31 December 2022
Page 12
Share capital
Share premium account
Profit and loss reserves
Total
Notes
£
£
£
£
Balance at 10 August 2021
-
Period ended 31 December 2021:
Loss and total comprehensive income for the period
-
-
(968,539)
(968,539)
Issue of share capital
18
3
26,867,780
-
26,867,783
Balance at 31 December 2021
3
26,867,780
(968,539)
25,899,244
Year ended 31 December 2022:
Loss and total comprehensive income for the year
-
-
(2,832,520)
(2,832,520)
Issue of share capital
18
4
118,894,722
-
118,894,726
Balance at 31 December 2022
7
145,762,502
(3,801,059)
141,961,450
The notes on pages 13 to 29 form part of these financial statements.
Arc Media Holdings Limited
Notes to the financial statements
For the year ended 31 December 2022
Page 13
1
Accounting policies
Company information
Arc Media Holdings Limited is a private company limited by shares incorporated in England and Wales. The registered office is Unit 4 Fulwood Park, Caxton Road, Fulwood, Preston, PR2 9NZ. The Company's principal activities are set out in the strategic report.
The prior year financial statements present the 5 month period from incorporation, being 10 August 2021, to 31 December 2021.
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 pound sterling, which is the functional currency of the company. Monetary amounts in these financial statements are rounded to the nearest £.
The financial statements have been prepared under the historical cost convention. The principal accounting policies adopted are set out below.
This 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:
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: Interest income/expense and net gains/losses for financial instruments not measured at fair value; basis of determining fair values; details of collateral, loan defaults or breaches, details of hedges, hedging fair value changes recognised in profit or loss and in other comprehensive income;
Section 33 ‘Related Party Disclosures’: Compensation for key management personnel.
The financial statements of the company are consolidated in the financial statements of Arc Investco Limited as at 31 December 2022. These consolidated financial statements are available from its registered office, Unit 4 Fulwood Park, Caxton Road, Fulwood, Preston, PR2 9NZ.
Arc Media Holdings Limited
Notes to the financial statements (continued)
For the year ended 31 December 2022
1
Accounting policies (continued)
Page 14
1.1
Accounting convention (continued)
The company has taken advantage of the exemption under section 400 of the Companies Act 2006 not to prepare consolidated accounts. The financial statements present information about the company as an individual entity and not about its group.
1.2
Going concern
The Company is in a net asset position and meets its day to day working capital requirements through the performance of its investments and intercompany balances. The company is financially supported by Arc Investco Limited which has confirmed that it will continue to provide ongoing financial support for the company for the foreseeable future and a period of at least 12 months plus one day from the issuance of the financial statements.true
In respect of the intercompany loan balance of £12,264,442 due to Group Undertakings, confirmation has been obtained that repayment of the balances will not be demanded or sought unless the company has the financial resources available to do so. On the basis of this assessment, the directors consider that the company has adequate resources to operate for the foreseeable future, and as such, has adopted the going concern basis in preparing these financial statements.
1.3
Tangible fixed assets
Tangible fixed assets are initially measured at cost and subsequently measured at cost or valuation, net of depreciation and any impairment losses.
Depreciation is recognised so as to write off the cost or valuation of assets less their residual values over their useful lives on the following bases:
Computers
3 years straight line
The gain or loss arising on the disposal of an asset is determined as the difference between the sale proceeds and the carrying value of the asset, and is credited or charged to profit or loss.
Arc Media Holdings Limited
Notes to the financial statements (continued)
For the year ended 31 December 2022
1
Accounting policies (continued)
Page 15
1.4
Fixed asset investments
Interests in subsidiaries, associates and jointly controlled entities are initially measured at cost and subsequently measured at cost less any accumulated impairment losses. The investments are assessed for impairment at each reporting date and any impairment losses or reversals of impairment losses are recognised immediately in profit or loss.
A subsidiary is an entity controlled by the company. Control is the power to govern the financial and operating policies of the entity so as to obtain benefits from its activities.
1.5
Impairment of fixed assets
At each reporting period end date, the company reviews the carrying amounts of its tangible assets to determine whether there is any indication that those assets have suffered an impairment loss. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment loss (if any). Where it is not possible to estimate the recoverable amount of an individual asset, the company estimates the recoverable amount of the cash-generating unit to which the asset belongs.
Recoverable amount is the higher of fair value less costs to sell and value in use. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset for which the estimates of future cash flows have not been adjusted.
If the recoverable amount of an asset (or cash-generating unit) is estimated to be less than its carrying amount, the carrying amount of the asset (or cash-generating unit) is reduced to its recoverable amount. An impairment loss is recognised immediately in profit or loss, unless the relevant asset is carried at a revalued amount, in which case the impairment loss is treated as a revaluation decrease.
Recognised impairment losses are reversed if, and only if, the reasons for the impairment loss have ceased to apply. Where an impairment loss subsequently reverses, the carrying amount of the asset (or cash-generating unit) is increased to the revised estimate of its recoverable amount, but so that the increased carrying amount does not exceed the carrying amount that would have been determined had no impairment loss been recognised for the asset (or cash-generating unit) in prior years. A reversal of an impairment loss is recognised immediately in profit or loss, unless the relevant asset is carried at a revalued amount, in which case the reversal of the impairment loss is treated as a revaluation increase.
Arc Media Holdings Limited
Notes to the financial statements (continued)
For the year ended 31 December 2022
1
Accounting policies (continued)
Page 16
1.6
Financial instruments
The company has elected to apply the provisions of Section 11 ‘Basic Financial Instruments’ and Section 12 ‘Other Financial Instruments Issues’ of FRS 102 to all of its financial instruments.
Financial instruments are recognised in the company's statement of financial position when the company becomes party to the contractual provisions of the instrument.
Financial assets and liabilities are offset, with the net amounts presented in the financial statements, when there is a legally enforceable right to set off the recognised amounts and there is an intention to settle on a net basis or to realise the asset and settle the liability simultaneously.
Basic financial assets
Basic financial assets, which include debtors, 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.
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 company 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 company after deducting all of its liabilities.
Arc Media Holdings Limited
Notes to the financial statements (continued)
For the year ended 31 December 2022
1
Accounting policies (continued)
Page 17
1.6
Financial instruments (continued)
Basic financial liabilities
Basic financial liabilities, including creditors and loans from fellow group companies 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.
Other financial liabilities
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.
1.7
Equity instruments
Equity instruments issued by the company are recorded at the proceeds received, net of transaction costs. Dividends payable on equity instruments are recognised as liabilities once they are no longer at the discretion of the company.
Arc Media Holdings Limited
Notes to the financial statements (continued)
For the year ended 31 December 2022
1
Accounting policies (continued)
Page 18
1.8
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 period. Taxable profit differs from net profit as reported in the income statement 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 company’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. Where items recognised in other comprehensive income or equity are chargeable to or deductible for tax purposes, the resulting current or deferred tax expense or income is presented in the same component of comprehensive income or equity as the transaction or other event that resulted in the tax expense or income. Deferred tax assets and liabilities are offset when the company has 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.
1.9
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.
1.10
Retirement benefits
Payments to defined contribution retirement schemes are charged as an expense as they fall due.
1.11
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.
Arc Media Holdings Limited
Notes to the financial statements (continued)
For the year ended 31 December 2022
1
Accounting policies (continued)
Page 19
1.12
Exceptional items are transactions that fall within the ordinary activities of the company but are presented separately due to their size or incidence.
2
Critical accounting judgements and key sources of estimation uncertainty
In the application of the company’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.
Critical judgements
The following judgements (apart from those involving estimates) have had the most significant effect on amounts recognised in the financial statements.
Earnout estimate
Some of the company's acquisitions include and element of deferred consideration which is payable if specific targets are met. These targets generaly relate to growth in EBITDA of the acquired business. Management regularly reassess the need for a provision for contingent consideration in the accounts based on the latest estimates of performance for the periods in question.
Investments
Judgements are required in assessing the recoverable value of the company's investments. Where indications of impairment exist the company reviews the carrying value of its investments for principal impairment based on their recoverable values, being the higher of the investments value in use and fair value less costs to sell.
Recoverability of amounts owed by group undertakings
We consider the need for any provision for impairment of the carrying value of amounts owed by group undertakings, based on management's estimate of the prospect of recovering the amount due, which includes considering the solvency of the counterparty and its future outlook, based on budgets and forecasts prepared by management. No such provisions have been made as at 31 December 2022.
Arc Media Holdings Limited
Notes to the financial statements (continued)
For the year ended 31 December 2022
Page 20
3
Exceptional item
2022
2021
£
£
Expenditure
Acquisition costs
1,366,941
636,315
The above costs are pre-acquisition and post-acquisition costs relating to the integration of new entities and establishment of group structure.
4
Auditor's remuneration
2022
2021
Fees payable to the company's auditor and associates:
£
£
For audit services
Audit of the financial statements of the company
7,500
4,000
5
Employees
The average monthly number of persons (including directors) employed by the company during the year was:
2022
2021
Number
Number
3
3
Their aggregate remuneration comprised:
2022
2021
£
£
Wages and salaries
1,166,092
178,852
Social security costs
121,960
26,273
Pension costs
35,883
11,469
1,323,935
216,594
Arc Media Holdings Limited
Notes to the financial statements (continued)
For the year ended 31 December 2022
Page 21
6
Directors' remuneration
2022
2021
£
£
Remuneration for qualifying services
43,686
Company pension contributions to defined contribution schemes
4,911
48,597
For the current year, the Company directors were remunerated from other group entities. For the prior year, the above disclosed directors' remuneration is included within the totals of note 5.
7
Interest receivable and similar income
2022
2021
£
£
Other income from investments
Exchange differences arising on foreign currency debt
1,870,191
8
Interest payable and similar expenses
2022
2021
£
£
Other interest on financial liabilities
855,241
9
Taxation
2022
2021
£
£
Current tax
UK corporation tax on profits for the current period
(68,548)
Arc Media Holdings Limited
Notes to the financial statements (continued)
For the year ended 31 December 2022
9
Taxation (continued)
Page 22
The actual 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:
2022
2021
£
£
Loss before taxation
(2,832,520)
(1,037,087)
Expected tax credit based on the standard rate of corporation tax in the UK of 19.00% (2021: 19.00%)
(538,179)
(197,047)
Tax effect of expenses that are not deductible in determining taxable profit
259,917
121,042
Group relief
261,104
Other permanent differences
6,211
Deferred tax not recognised
1,464
1,246
Other
15,694
Taxation credit for the year
-
(68,548)
Factors that may affect future tax charges:
The Finance Act 2021 was substantively enacted in May 2021 and increased the corporation tax rate from 19% to 25% with effect from 1 April 2023. The deferred taxation balances have been measured using the rates expected to apply in the reporting periods when the timing differences reverse.
Arc Media Holdings Limited
Notes to the financial statements (continued)
For the year ended 31 December 2022
Page 23
10
Tangible fixed assets
Computers
£
Cost
Additions
3,196
At 31 December 2022
3,196
Depreciation and impairment
Depreciation charged in the year
472
At 31 December 2022
472
Carrying amount
At 31 December 2022
2,724
At 31 December 2021
11
Fixed asset investments
2022
2021
Notes
£
£
Investments in subsidiaries
12
197,381,219
29,031,348
Arc Media Holdings Limited
Notes to the financial statements (continued)
For the year ended 31 December 2022
11
Fixed asset investments (continued)
Page 24
Movements in fixed asset investments
Shares in subsidiaries
£
Cost or valuation
At 1 January 2022
29,031,348
Additions
168,349,871
At 31 December 2022
197,381,219
Carrying amount
At 31 December 2022
197,381,219
At 31 December 2021
29,031,348
In the year, the Company made further investments in its existing subsidiaries of £4,118,437 relating to the finalisation of acquisition cost from the prior year and to provide funding for further acquisitions within the Group.
The Company also acquired 100% of the share capital of Incisive Media Group Holdings Limited, a company incorporated in the UK, at a cost £21,246,624, including related acquisition costs.
The Company also invested in to a new subsidiary, Arc Network Holdings Corp, a company incorporated in the US, with £142,984,810 in cash to fund two further acquisitions within the Group.
Arc Media Holdings Limited
Notes to the financial statements (continued)
For the year ended 31 December 2022
Page 25
12
Subsidiaries
Details of the company's subsidiaries at 31 December 2022 are as follows:
Name of undertaking
Address
Class of shares held
% Held
Direct
Indirect
LAMMA Limited
1
Ordinary Shareholding
100.00
-
Farmers Guardian Limited
1
Ordinary Shareholding
100.00
-
Holiday Parks & Resorts Ltd
1
Ordinary Shareholding
100.00
-
Family Attractions Ltd
1
Ordinary Shareholding
100.00
-
Incisive Media Group Holdings Limited
2
Ordinary shareholding
100.00
-
Incisive Business Media (IP) Limited
2
Ordinary Shareholding
0
100.00
Incisive Business Media Limited
2
Ordinary Shareholding
0
100.00
Arc Network Holdings Corp
4
Ordinary Shareholding
100.00
-
HighQuest Partners, LLC
5
Ordinary Shareholding
0
100.00
Arc Network LLC
6
Ordinary Shareholding
0
100.00
HRM Asia LLC
7
Ordinary Shareholding
0
100.00
HRM Asia Pte, Ltd
8
Ordinary Shareholding
0
100.00
FoodCompanions Impact B.V.
3
Ordinary Shareholding
0
100.00
FoodCompanions B.V.
3
Ordinary Shareholding
0
100.00
Farm Business Innovation Ltd
1
Ordinary Shareholding
100.00
-
Arc Media Holdings Limited
Notes to the financial statements (continued)
For the year ended 31 December 2022
12
Subsidiaries (continued)
Page 26
Registered office addresses (all UK unless otherwise indicated):
1
Unit 4 Fulwood Park Caxton Road, Fulwood, Preston, England, PR2 9NZ, UK
2
New London House, 172 Drury Lane, London, England, WC2B 5QR, UK
3
Aan de Rijn 6, 6701PB, Wageningen, Netherlands
4
1185 Avenue of the Americas, 39th Floor, New York, NY 10036, USA
5
10 South Main Street, Suite 209, Topsfield, MA 01983, USA
6
108 Lakeland Avenue, Dover, Delaware 19901, USA
7
360 Hiatt Drive, Palm Beach Gardens, FL 33418, USA
8
109 North Bridge Road 05-21, Singapore 179097
13
Debtors
2022
2021
Amounts falling due within one year:
£
£
Corporation tax recoverable
87,299
87,299
Amounts owed by group undertakings
2,743,474
1,744,467
Other debtors
174,166
Prepayments and accrued income
26,010
49,030
3,030,949
1,880,796
2022
2021
Amounts falling due after more than one year:
£
£
Prepayments and accrued income
1,380,147
Total debtors
4,411,096
1,880,796
Amounts owed by group undertakings are unsecured, interest free and there are no set terms of repayment.
Arc Media Holdings Limited
Notes to the financial statements (continued)
For the year ended 31 December 2022
Page 27
14
Creditors: amounts falling due within one year
2022
2021
Notes
£
£
Other borrowings
16
1,276,818
Trade creditors
(31,136)
85,431
Amounts owed to group undertakings
12,264,442
1,525,988
Taxation and social security
48,867
11,925
Other creditors
2,261,577
3,149,077
Accruals and deferred income
1,182,023
240,479
17,002,591
5,012,900
Amounts owed to group undertakings falling due within one year are unsecured, interest free and there are no set terms of repayment.
15
Creditors: amounts falling due after more than one year
2022
2021
Notes
£
£
Other borrowings
16
42,875,373
16
Loans and overdrafts
2022
2021
£
£
Other loans
44,152,191
Payable within one year
1,276,818
Payable after one year
42,875,373
The long-term loans are unsecured.
Interest is charged at a variable rate based on SOFR. Interest is paid either monthly or quarterly as elected by the borrower. Repayments of the borrowings are made at 1% of the balance per annum, in quarterly payments of $375,000 each. The remaining loan will be repayable on the sale of the Arc business. There are restrictive covenants imposed by the lender.
Arc Media Holdings Limited
Notes to the financial statements (continued)
For the year ended 31 December 2022
Page 28
17
Retirement benefit schemes
2022
2021
Defined contribution schemes
£
£
Charge to profit or loss in respect of defined contribution schemes
35,883
11,469
The company operates a defined contribution pension scheme for all qualifying employees. The assets of the scheme are held separately from those of the company in an independently administered fund.
At the balance sheet date, outstanding contributions amounts to £nil (2021: £nil) and are included within other creditors.
18
Share capital
2022
2021
2022
2021
Ordinary share capital
Number
Number
£
£
Issued and fully paid
Ordinary shares of £1 each
7
3
7
3
The company has one class of ordinary share carrying full rights to voting, dividends and distribution of capital.
On 31 March 2022, 1 Ordinary share with a nominal value of £1 was issued for an aggregate cash consideration of £1,931,506.
On 4 May 2022, a further 1 Ordinary share with a nominal value of £1 was issued for an aggregate cash consideration of £4,714,192.
On 30 June 2022, a further 1 Ordinary share with a nominal value of £1 was issued for an aggregate cash consideration of £14,150,744.
On 31 October 2022, a further 1 Ordinary share with a nominal value of £1 was issued for an aggregate consideration of £95,684,425.
During the year, interests in B shares totalling a value of £2,413,859 were awarded in lieu of fees as part of the acquisitions made (see note 11) and this amount has been recognised in share premium.
Arc Media Holdings Limited
Notes to the financial statements (continued)
For the year ended 31 December 2022
Page 29
19
Events after the reporting date
Since 31 December 2022, the Company has made two acquisitions:
On 22 May 2023, the Company acquired Marketing in Partnership Limited ("MiP"), which is a leading provider of outsourced marketing services, events and content to the UK asset management sector.
On 9 June 2023, the group acquired Renewable Energy Events Limited, which operates a portfolio of events and media assets serving the sustainable farming sector, including Low Carbon Agriculture.
The aggregate net initial consideration paid for these acquisitions was £12.1 million which was funded by a combination of debt and the issue of equity shares by Arc Investco Limited. There are earn out arrangements in place under which additional consideration will become payable up to a maximum of £6.2 million if certain earnings targets are met.
20
Ultimate controlling party
The immediate parent undertaking is Arc Holdco Limited. The ultimate parent company is Arc Investco Limited. This is the only group of which the company is a member for which group financial statements are prepared. Copies of the group financial statements are available from the company's registered office at Unit 4 Fulwood Park, Caxton Road, Fulwood, Preston, England, PR2 9NZ.
In the opinion of the directors, there is no ultimate controlling party.
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