Company Registration No. 03227470 (England and Wales)
LIVE NATION MERCHANDISE LIMITED
ANNUAL REPORT AND FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
LIVE NATION MERCHANDISE LIMITED
COMPANY INFORMATION
Directors
S Douglas
N Dunphy
S Emeny
L Lavelle
Secretary
S Emeny
Company number
03227470
Registered office
30 St John Street
London
EC1M 4AY
Auditor
HW Fisher LLP
Acre House
11-15 William Road
London
NW1 3ER
United Kingdom
Bankers
Natwest Bank Plc
1st Floor
440 Strand
London
WC2R 0QS
LIVE NATION MERCHANDISE LIMITED
CONTENTS
Page
Strategic report
1
Directors' report
2
Directors' responsibilities statement
3
Independent auditor's report
4 - 6
Statement of comprehensive income
7
Balance sheet
8
Statement of changes in equity
9
Notes to the financial statements
10 - 18
LIVE NATION MERCHANDISE LIMITED
STRATEGIC REPORT
FOR THE YEAR ENDED 31 DECEMBER 2022
- 1 -
The directors present the strategic report and financial statements for the year ended 31 December 2022.
Principal Activities
The principal activity of the company was the design, manufacture and sale of official licensed merchandising products. The company's business activities have been transferred to another Live Nation group company.
Fair review of the business
The main distribution sales channels were historically the sale of merchandise through retail, online and live touring events. Following the group restructuring with effect from 1 January 2022, the company's stock was transferred to Merch Traffic Limited, another group entity and the company has since heavily reduced trading activities from that date.
The company made a pre-tax loss of £26 (2021 - loss of £242,979) for the year on a turnover of £246,815 (2021 - £14,738,281).
At 31 December 2022 the company had net liabilities of £1,522,942 (2021 - £1,643,966).
Turnover has decreased by 98.3% from 2021 to 2022 owing to the events as described above.
Principal risks and uncertainties
The directors recognise that within the business there are a number of risks as described below which may affect the performance of the company. These risks are subject to regular review and where appropriate processes are established to minimise the level of exposure.
Operating expenses
These are monitored against budgeted amounts for each expense category.
Financial risk
The directors acknowledge responsibility for the company's internal financial control and believe the systems are appropriate to the business. The most important components of financial risk are credit risk and liquidity risk. Working capital control together with the adequacy of banking facilities and support from the parent company mitigate liquidity risk.
Key performance indicators
In the opinion of the Directors, there are no key performance indicators for the company for the financial year under review.
L Lavelle
Director
16 February 2024
LIVE NATION MERCHANDISE LIMITED
DIRECTORS' REPORT
FOR THE YEAR ENDED 31 DECEMBER 2022
- 2 -
The directors present their report and accounts for the year ended 31 December 2022.
Directors
The directors who held office during the year and up to the date of signature of the financial statements were as follows:
S Douglas
N Dunphy
S Emeny
L Lavelle
Results and dividends
The results for the year are set out on page 7.
No ordinary dividends were paid. The directors do not recommend payment of a final dividend.
Statement of disclosure to auditor
Each of the directors has confirmed that there is no information of which they are aware which is relevant to the audit, but of which the auditors are unaware. They have further confirmed that they have taken appropriate steps to identify such relevant information and to establish that the auditors are aware of such information.
On behalf of the board
L Lavelle
Director
16 February 2024
LIVE NATION MERCHANDISE LIMITED
DIRECTORS' RESPONSIBILITIES STATEMENT
FOR THE YEAR ENDED 31 DECEMBER 2022
- 3 -
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;
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.
LIVE NATION MERCHANDISE LIMITED
INDEPENDENT AUDITOR'S REPORT
TO THE MEMBERS OF LIVE NATION MERCHANDISE LIMITED
- 4 -
Opinion
We have audited the financial statements of Live Nation Merchandise Limited (the 'company') for the year ended 31 December 2022 which comprise the statement of comprehensive income, the balance sheet, the statement of changes in equity 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:
give a true and fair view of the state of the company's affairs as at 31 December 2022 and of its profit 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 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.
Emphasis of matter - financial statements prepared on a basis other than going concern and accounting estimate
We draw your attention to note 1.2 of these financial statements, which explains that the company has heavily reduced trading activities with effect from 1 January 2022 . The directors will be entering into a business agreement with the intention to transfer any remaining assets and liabilities once remaining trading activities have also been transferred. Therefore, the directors do not consider it to be appropriate to adopt the going concern basis of accounting in preparing the financial statements. Accordingly the financial statements have been prepared on a basis other than going concern as described in note 1.2.
We also draw your attention to note 2 of these financial statements, which describes that the company is exposed to a claim for German VAT, included within accruals and estimated at £541,995 (2021: £1,054,212).
With reference to both of the above points, our opinion is not modified.
The other information comprises the information included in the annual report other than the financial statements and our auditor's report thereon. The directors are responsible for the other information contained within the annual report. Our opinion on the financial statements does not cover the other information and, except to the extent otherwise explicitly stated in our report, we do not express any form of assurance conclusion thereon. Our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the course of the audit, or otherwise appears to be materially misstated. If we identify such material inconsistencies or apparent material misstatements, we are required to determine whether this gives rise to a material misstatement in the financial statements themselves. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact.
We have nothing to report in this regard.
Opinions on other matters prescribed by the Companies Act 2006
In our opinion, based on the work undertaken in the course of our audit:
the information given in the strategic report and the directors' report for the financial year for which the financial statements are prepared is consistent with the financial statements; and
the strategic report and the directors' report have been prepared in accordance with applicable legal requirements.
LIVE NATION MERCHANDISE LIMITED
INDEPENDENT AUDITOR'S REPORT (CONTINUED)
TO THE MEMBERS OF LIVE NATION MERCHANDISE LIMITED
- 5 -
Matters on which we are required to report by exception
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 strategic report and the directors' report.
We have nothing to report in respect of the following matters where the Companies Act 2006 requires us to report to you if, in our opinion:
adequate accounting records have not been kept, 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 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.
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.
As part of our planning process:
We enquired of management the systems and controls the company has in place, the areas of the financial statements that are most susceptible to the risk of irregularities and fraud, and whether there was any known, suspected or alleged fraud. The company did not inform us of any known, suspected or alleged fraud.
We obtained an understanding of the legal and regulatory frameworks applicable to the company. We determined that the following were most relevant: FRS 102 and Companies Act 2006.
We considered the incentives and opportunities that exist in the company, including the extent of management bias, which present a potential for irregularities and fraud to be perpetuated, and tailored our risk assessment accordingly.
Using our knowledge of the company, together with the discussions held with the company at the planning stage, we formed a conclusion on the risk of misstatement due to irregularities including fraud and tailored our procedures according to this risk assessment.
LIVE NATION MERCHANDISE LIMITED
INDEPENDENT AUDITOR'S REPORT (CONTINUED)
TO THE MEMBERS OF LIVE NATION MERCHANDISE LIMITED
- 6 -
The key procedures we undertook to detect irregularities including fraud during the course of the audit included:
Identifying and testing journal entries and the overall accounting records, in particular those that were significant and unusual.
Reviewing the financial statement disclosures and determining whether accounting policies have been appropriately applied.
Reviewing and challenging the assumptions and judgements used by management in their significant accounting estimates, in particular in relation to the ongoing German VAT investigation.
Assessing the extent of compliance, or lack of, with the relevant laws and regulations.
Testing key revenue lines, in particular cut-off, for evidence of management bias.
Observing the client logging into their online banking in order to verify the closing positions for each held account.
Documenting and verifying all significant related party balances and transactions.
Owing to the inherent limitations of an audit, there is an unavoidable risk that we may not have detected some material misstatements in the financial statements even though we have properly planned and performed our audit in accordance with auditing standards. The primary responsibility for the prevention and detection of irregularities and fraud rests with management.
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.
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.
Gilles Siow (Senior Statutory Auditor)
For and on behalf of HW Fisher LLP
Chartered Accountants
Statutory Auditor
Acre House
11-15 William Road
London
NW1 3ER
United Kingdom
16 February 2024
LIVE NATION MERCHANDISE LIMITED
STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEAR ENDED 31 DECEMBER 2022
- 7 -
2022
2021
Notes
£
£
Turnover
3
246,815
14,783,281
Cost of sales
(71,432)
(13,709,084)
Gross profit
175,383
1,074,197
Administrative expenses
(175,948)
(1,329,606)
Other operating income
12,934
Operating loss
4
(565)
(242,475)
Interest receivable and similar income
6
539
Interest payable and similar expenses
7
(504)
Loss before taxation
(26)
(242,979)
Taxation
8
121,050
17,723
Profit/(loss) for the financial year
121,024
(225,256)
Total comprehensive income for the year
121,024
(225,256)
As disclosed in note 1.2, the company has heavily reduced trading activities as of 1 January 2022. The Statement of Comprehensive Income represents discontinued operations.
LIVE NATION MERCHANDISE LIMITED
BALANCE SHEET
AS AT
31 DECEMBER 2022
31 December 2022
- 8 -
2022
2021
Notes
£
£
£
£
Fixed assets
Tangible assets
9
346
866
Current assets
Stocks
10
-
181,667
Debtors
11
1,815,562
7,405,743
Cash at bank and in hand
13,293,820
9,331,921
15,109,382
16,919,331
Creditors: amounts falling due within one year
12
(16,632,670)
(18,564,163)
Net current liabilities
(1,523,288)
(1,644,832)
Total assets less current liabilities
(1,522,942)
(1,643,966)
Capital and reserves
Called up share capital
13
1,000
1,000
Share premium account
3,107,696
3,107,696
Profit and loss reserves
(4,631,638)
(4,752,662)
Total equity
(1,522,942)
(1,643,966)
The financial statements were approved by the board of directors and authorised for issue on 16 February 2024 and are signed on its behalf by:
L Lavelle
Director
Company Registration No. 03227470
LIVE NATION MERCHANDISE LIMITED
STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 DECEMBER 2022
- 9 -
Share capital
Share premium account
Profit and loss reserves
Total
£
£
£
£
Balance at 1 January 2021
1,000
3,107,696
(4,527,406)
(1,418,710)
Year ended 31 December 2021:
Loss and total comprehensive income for the year
-
-
(225,256)
(225,256)
Balance at 31 December 2021
1,000
3,107,696
(4,752,662)
(1,643,966)
Year ended 31 December 2022:
Profit and total comprehensive income for the year
-
-
121,024
121,024
Balance at 31 December 2022
1,000
3,107,696
(4,631,638)
(1,522,942)
LIVE NATION MERCHANDISE LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
- 10 -
1
Accounting policies
Company information
Live Nation Merchandise Limited is a limited company domiciled and incorporated in England and Wales. The registered office is 30 St John Street, London, EC1M 4AY. The ultimate parent company is Live Nation Entertainment Inc., which is incorporated in the United States of America. Copies of the consolidated financial statements for Live Nation Entertainment Inc. are available from http://investors.livenationentertainment.com.
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. 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 each category of financial instrument; 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 Live Nation Entertainment, Inc. (USA). These consolidated financial statements are available from its registered office,
1.2
Going concern
Following the group restructuring with effect from 1 January 2022, the company's remaining stock was transferred to Merch Traffic Limited, another group entity and the company has since heavily reduced trading activities from that date. The company will be entering a business transfer agreement ('BTA') to transfer any remaining trade, assets and liabilities to Merch Traffic Limited but the BTA is yet to be finalised. Merch Traffic Limited has pledged financial support to the company to ensure any liabilities as they fall due are met should the company require support. The directors have also confirmed the overall intention for the company is to enter liquidation once any remaining trade, assets and liabilities have been transferred. These financial statements have therefore been prepared on a basis other than going concern. Notwithstanding this, there are no material changes in the presentation or carrying value of the assets or liabilities, and no further liabilities need to be provided for as a result of the decision to cease trading.true
1.3
Turnover
Turnover is recognised at the fair value of the consideration received or receivable for goods and services provided in the normal course of business, and is shown net of VAT and other sales related taxes. The fair value of consideration takes into account trade discounts, settlement discounts and volume rebates.
Revenue from the sale of goods is recognised when the significant risks and rewards of ownership of the goods have passed to the buyer (usually on sale of the goods), the amount of revenue can be measured reliably, it is probable that the economic benefits associated with the transaction will flow to the entity and the costs incurred or to be incurred in respect of the transaction can be measured reliably.
LIVE NATION MERCHANDISE LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2022
1
Accounting policies
(Continued)
- 11 -
1.4
Tangible fixed assets
Tangible fixed assets are initially measured at cost and subsequently measured at cost, net of depreciation and any impairment losses.
Tangible fixed assets are stated at cost less depreciation. Depreciation is provided on all tangible fixed assets at rates calculated to write off the cost less estimated residual value of each asset over its expected useful life, as follows:
Leasehold improvements
Over the term of the lease straight line
Fixtures, fittings & equipment
3-5 years straight line
The gain or loss arising on the disposal of an asset is determined as the difference between the sale proceeds and the carrying value of the asset, and is credited or charged to profit or loss.
1.5
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.
1.6
Stocks
Stocks are stated at the lower of cost and estimated selling price less costs to complete and sell. Cost comprises direct materials and, where applicable, direct labour costs and those overheads that have been incurred in bringing the stocks to their present location and condition.
At each reporting date, an assessment is made for impairment. Any excess of the carrying amount of stocks over its estimated selling price less costs to complete and sell is recognised as an impairment loss in profit or loss. Reversals of impairment losses are also recognised in profit or loss.
Following the group restructuring as explained in note 16, the remaining ecommerce and retail stock was written down by 85% and transferred to Merch Traffic Limited during the year.
1.7
Financial assets
The company has elected to apply the provisions of Section 11 ‘Basic Financial Instruments’ and Section 12 ‘Other Financial Instruments Issues’ of FRS 102 to all of its financial instruments.
Financial instruments are recognised in the company's balance sheet when the company becomes party to the contractual provisions of the instrument.
Financial assets and liabilities are offset, with the net amounts presented in the financial statements, when there is a legally enforceable right to set off the recognised amounts and there is an intention to settle on a net basis or to realise the asset and settle the liability simultaneously.
LIVE NATION MERCHANDISE LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2022
1
Accounting policies
(Continued)
- 12 -
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.
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.
1.8
Financial liabilities
Basic financial liabilities, including creditors, 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.
Derecognition of financial liabilities
Financial liabilities are derecognised when the company’s contractual obligations expire or are discharged or cancelled.
1.9
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.
Changes in the fair value of derivatives that are designated and qualify as fair value hedges are recognised in profit or loss immediately, together with any changes in the fair value of the hedged asset or liability that are attributable to the hedged risk.
1.10
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 company’s liability for current tax is calculated using tax rates that have been enacted or substantively enacted by the reporting end date.
LIVE NATION MERCHANDISE LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2022
1
Accounting policies
(Continued)
- 13 -
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 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.
1.11
Employee benefits
The costs of short-term employee benefits are recognised as a liability and an expense, unless those costs are required to be recognised as part of the cost of stock or fixed assets.
The cost of any unused holiday entitlement is recognised in the period in which the employee’s services are received.
Termination benefits are recognised immediately as an expense when the company is demonstrably committed to terminate the employment of an employee or to provide termination benefits.
1.12
Leases
Rentals payable under operating leases, including any lease incentives received, are charged to profit or loss on a straight line basis over the term of the relevant lease except where another more systematic basis is more representative of the time pattern in which economic benefits from the leases asset are consumed.
1.13
Government grants
Government grants which include amounts received under the Coronavirus Job Retention Scheme, are recognised at the fair value of the grant received or receivable when there is reasonable assurance that the grant conditions will be met and the grants will be received. The income is recognised in other income on a systematic basis over the period in which the associated costs are incurred, using the accrual model.
1.14
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 are included in the profit and loss account for the period.
2
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.
LIVE NATION MERCHANDISE LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2022
2
Judgements and key sources of estimation uncertainty
(Continued)
- 14 -
Key sources of estimation uncertainty
The estimates and assumptions which have a significant risk of causing a material adjustment to the carrying amount of assets and liabilities are as follows.
Accounting estimate
Included within accruals is £541,995 (2021: £1,054,212) in respect of a claim for VAT from the German authorities covering the period from 2013 to 2018. The company has previously been advised by German tax advisors and legal professionals who had calculated the liability. There has been no further communication with either the German tax advisors or legal professionals during the year ended 31 December 2022 or subsequently. In the absence of more recent information about the liability, the Directors have concluded that the prior calculations are the most appropriate estimate for this probable liability.
3
Turnover and other revenue
An analysis of the company's turnover is as follows:
2022
2021
£
£
Turnover analysed by class of business
Touring
36,145
703,746
Retail
(3,392)
10,198,942
E-Commerce
214,062
3,880,593
246,815
14,783,281
2022
2021
£
£
Other significant revenue
Interest income
539
-
2022
2021
£
£
Turnover analysed by geographical market
United Kingdom
246,815
13,063,907
Rest of the World
-
1,719,374
246,815
14,783,281
4
Operating loss
2022
2021
Operating loss for the year is stated after charging/(crediting):
£
£
Exchange losses
147,273
252,686
Fees payable to the company's auditor for the audit of the company's financial statements
23,496
31,464
Depreciation of owned tangible fixed assets
520
2,146
Operating lease charges
(2,049)
133,294
LIVE NATION MERCHANDISE LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2022
- 15 -
5
Employees
The average monthly number of persons (including directors) employed by the company during the year was:
2022
2021
Number
Number
Administration
15
10
15
10
2022
2021
£
£
Wages and salaries
557,417
Social security costs
65,188
Pension costs
22,517
645,122
Directors' emoluments have been borne by various other companies within the Group. The directors are also directors or officers of a number of companies within the Live Nation Entertainment, Inc. Group. The directors' services to the company do not occupy a significant amount of their time. As such the directors do not consider that they have received any remuneration for their incidental services to the company for the year ended 31 December 2022.
6
Interest receivable and similar income
2022
2021
£
£
Interest income
Interest on bank deposits
539
7
Interest payable and similar expenses
2022
2021
£
£
Other interest
504
8
Taxation
2022
2021
£
£
Current tax
UK corporation tax on profits for the current period
(34,219)
Adjustments in respect of prior periods
(104,554)
Total current tax
(104,554)
(34,219)
LIVE NATION MERCHANDISE LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2022
8
Taxation
(Continued)
- 16 -
Deferred tax
Origination and reversal of timing differences
19,909
Changes in tax rates and laws
(3,413)
Previously unrecognised tax loss, tax credit or timing difference
(16,496)
Total deferred tax
(16,496)
16,496
Total tax charge/(credit)
(121,050)
(17,723)
The actual charge for the year can be reconciled to the expected credit for the year based on the profit and the standard rate of tax as follows:
2022
2021
£
£
Loss before taxation
(26)
(242,979)
Expected tax charge based on the standard rate of corporation tax in the UK of 19.00% (2021: 19.00%)
(5)
(46,166)
Tax effect of expenses that are not deductible in determining taxable profit
157
Adjustments in respect of prior years
(104,565)
Effect of change in corporation tax rate
(974)
(7,800)
Adjustments to deferred tax in respect of previous years
(16,496)
Change in unrecognised deferred tax assets
990
36,086
Total tax (credit)/charge for the year
(121,050)
(17,723)
The corporation tax rate for the current year remains the same as the prior year at 19%.
The Finance Act 2021 was substantively enacted on 24 May 2021 and has increased the corporation tax rate from 19% to 25% with effect from 1 April 2023.
The deferred taxation balances, where applicable, have been measured using the rates expected to apply in the reporting periods when the timing differences reverse.
LIVE NATION MERCHANDISE LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2022
- 17 -
9
Tangible fixed assets
Leasehold improvements
Fixtures, fittings & equipment
Total
£
£
£
Cost
At 1 January 2022
26,154
22,056
48,210
Disposals
(19,457)
(19,457)
At 31 December 2022
26,154
2,599
28,753
Depreciation and impairment
At 1 January 2022
26,154
21,190
47,344
Depreciation charged in the year
520
520
Eliminated in respect of disposals
(19,457)
(19,457)
At 31 December 2022
26,154
2,253
28,407
Carrying amount
At 31 December 2022
346
346
At 31 December 2021
866
866
10
Stocks
2022
2021
£
£
Finished goods and goods for resale
181,667
11
Debtors
2022
2021
Amounts falling due within one year:
£
£
Trade debtors
1,625,660
7,044,535
Corporation tax recoverable
162,498
240,501
Amount due from parent undertaking
42,618
Amounts due from fellow group undertakings
38,651
Other debtors
27,404
31,502
Prepayments and accrued income
7,936
1,815,562
7,405,743
LIVE NATION MERCHANDISE LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2022
- 18 -
12
Creditors: amounts falling due within one year
2022
2021
£
£
Trade creditors
59,670
847,724
Amounts owed to parent undertakings
15,331,284
12,773,668
Taxation and social security
80,356
39,769
Other creditors
82,593
Accruals and deferred income
1,161,360
4,820,409
16,632,670
18,564,163
13
Share capital
2022
2021
£
£
Ordinary share capital
Authorised
10,001 Ordinary shares of 10p each
1,000
1,000
1,000
1,000
14
Retirement benefit schemes
2022
2021
Defined contribution schemes
£
£
Charge to profit or loss in respect of defined contribution schemes
-
22,517
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.
15
Ultimate controlling party
The company's immediate parent undertaking is Live Nation Merchandise LLC, a Delaware limited liability corporation.
In the directors' opinion, the company's ultimate parent undertaking and controlling party is Live Nation Entertainment Inc. which is incorporated in the United States of America. The registered office is 9348 Civic Center Drive, Beverly Hills, CA, 90210. This is the smallest and largest group of undertakings for which group accounts have been drawn up.
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