Registration number:
for the Year Ended 31 December 2022
Mediamonks London Limited
Contents
Company Information |
|
Strategic Report |
|
Director's Report |
|
Statement of Director's Responsibilities |
|
Independent Auditor's Report |
|
Income Statement |
|
Statement of Comprehensive Income |
|
Statement of Financial Position |
|
Statement of Changes in Equity |
|
Statement of Cash Flows |
|
Notes to the Financial Statements |
Mediamonks London Limited
Company Information
Directors |
V O Knaap |
Registered office |
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Solicitors |
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Bankers |
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Auditors |
|
Mediamonks London Limited
Strategic Report for the Year Ended 31 December 2022
The director presents his strategic report for the year ended 31 December 2022.
Principal Activity
The principal activity of the company is creative digital production services.
Fair review of the business
The results for the year and financial position of the Company are shown in the annexed financial statements.
Our review is consistent with the size and non-complex nature of our business and is written in the context of the risks and uncertainties we face.
In total, the company grew its activities to £33.07m (2021: £27.37m) from new and existing clients. Gross profit increased from 43.5% to 70.55% with a gross profit of £23.33m (2021: £11.9m). Profit before tax increased to £883,111 from £635,843 in 2021 due to an increase in number of employees to support the planned future growth in business operations.
The retained profit after tax this year has increased the company’s net assets by £730,323 (2021: £592,620)
The company’s accumulated reserves now exceed £4m at the balance sheet date.
2022 witnessed a significant surge in margin compared to 2021, largely attributable to the expansion of operations by the company. This expansion was accompanied by an increase in headcount, leading to a consequent surge in personnel expenses. However, the anticipated revenue increase, which should ideally correlate with headcount, was partially generated in other group entities, and hence, not mirrored in the company books. Our approach of applying a cost-plus reimbursement method in supporting global productions causes the reimbursement to be reflected as a decrease in direct costs. Consequently, this methodological treatment of costs resulted in a rise in the margin for 2022 as compared to 2021.
2022 was the year that we became known for our unrivalled metaverse expertise. We’ve amped up our offering across the board and had our best year to date- with more industry peers joining us, more high-profile clients working with us, more innovation, more recognition, more awards, and more existing clients entrusting us with more business across more brands in their portfolio. We especially saw our offerings that support metaverse and virtualisation projects rise in demand among both existing and new clients.
We secured more assignments from leading global brands seeking innovative strategies to establish their presence in the metaverse - and we certainly delivered. Our industry-leading expertise in the use of Unreal Engine, the metaverse, blockchain, crypto, NFTs and Web3 places us at the forefront of digital innovation. Our groundbreaking project for a high-fashion luxury brand received global attention in a prominent fashion publication. We brought a popular sportswear brand's virtual world to life by utilizing AI to create avatars. We also launched a truly memorable Pride campaign with a prominent social media platform and offered consultation services for a social networking giant's virtual reality platform and its non-gaming VR applications.
All of this is testament to a people-first business that’s driven by digital talent and guided by a leadership team committed to building a dynamic peer network in order to accelerate innovation and growth, against the
backdrop of unprecedented challenges affecting the industry.
Mediamonks London Limited
Strategic Report for the Year Ended 31 December 2022
Principal risks and uncertainties
1. Risk and uncertainties: Macro-economic risks: Clients may reduce spending budgets for marketing and technology services because of poor macro-economic conditions. This could result in the company being unable to meet financial targets or deliver growth expectations
Response: The company has a diversified client base and continues to review its route-to market, as well changing client demands and expectations to help manage any economic headwinds.
2. Risk and uncertainties: Industry competition: The advertising, marketing and technology services industries are highly competitive and subject to significant and rapid change.
Response: The company focuses on multiple lines of business and its strategy to offer integrated services and disrupt the industry enables longer-term, more durable client relationships.
Future Outlook
We are seeing more and more clients seeking agility and rapid execution. Their focus is on tackling elusive top-line growth and inflation-induced pricing adjustments, with an emphasis on advertising that drives activation and performance. Consumer behaviour has evolved, marked by shorter attention spans and fickleness towards brands. This shift necessitates a focus on immediate activation and performance, rather than long-term brand awareness.
Furthermore, AI is going to have a huge impact in the sectors we serve. Generative tools like ChatGPT and Bard are enhancing productivity and capability across all departments, facilitating the creation of AI-driven brand experiences for clients. These advancements might lead big tech platforms to bypass media agencies, directly serving clients without requiring massive manpower for media plan execution. In such scenarios, our new role would be ensuring algorithm optimization for clients' benefits. While AI's impact can be seen as either a threat or opportunity, we view it unequivocally as the latter and are committed to leveraging our early mover advantage.
Change is happening rapidly every day, and we need to acknowledge that by constantly re-inventing ourselves and becoming the change makers. That’s how industries move forwards, and that’s the measure by which we should judge ourselves.
Summary
The directors are pleased with the overall financial performance of the company for the year ended 31 December 2022.
Approved by the director on 28 March 2024 and signed on its behalf by:
......................................... |
Mediamonks London Limited
Director's Report for the Year Ended 31 December 2022
The director presents his report and the financial statements for the year ended 31 December 2022.
Director of the company
The directors, who held office during the year, were as follows:
Principal activity
The principal activity of the company is creative digital production services.
Disclosure of information to the auditor
The director has taken steps that he ought to have taken as a director in order to make himself aware of any relevant audit information and to establish that the company's auditor is aware of that information. The director confirms that there is no relevant information that he knows of and of which he knows the auditor is unaware.
Approved by the
......................................... |
Mediamonks London Limited
Statement of Director's Responsibilities
The director acknowledges his responsibilities for preparing the Annual Report and the financial statements in accordance with applicable law and regulations.
Company law requires the director to prepare financial statements for each financial year. Under that law the director has elected to prepare the financial statements in accordance with UK adopted International Financial Reporting Standards (IFRSs) as adopted by the United Kingdom. Under company law the director must not approve the financial statements unless he is 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 director is required to:
• | select suitable accounting policies and apply them consistently; |
• | make judgements and accounting estimates that are reasonable and prudent; |
• | state whether applicable UK adopted International Financial Reporting Standards (IFRSs) as adopted by the United kingdom have been followed, subject to any material departures disclosed and explained in the financial statements; and |
• | prepare the financial statements on the going concern basis unless it is inappropriate to presume that the company will continue in business. |
The director is 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 him to ensure that the financial statements comply with the Companies Act 2006. He is 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.
Mediamonks London Limited
Independent Auditor's Report to the Members of Mediamonks London Limited
Opinion
We have audited the financial statements of Mediamonks London Limited (the 'company') for the year ended 31 December 2022, which comprise the Income Statement, Statement of Comprehensive Income, Statement of Financial Position, Statement of Changes in Equity, Statement of Cash Flows, 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 UK adopted International Financial Reporting Standards (IFRSs) as adopted by the United Kingdom.
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 UK adopted IFRSs; and |
• | have been prepared in accordance with the requirements of the Companies Act 2006. |
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 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 director's 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 original financial statements were 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 directors are responsible for the other information. The other information comprises the information included in the annual report, 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.
In connection with our audit of the financial statements, 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 audit or otherwise appears to be materially misstated. If we identify such material inconsistencies or apparent material misstatements, we are required to determine whether there is a material misstatement in the financial statements or a material misstatement of the other information. 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.
Mediamonks London Limited
Independent Auditor's Report to the Members of Mediamonks London Limited
Opinion on other matter prescribed by the Companies Act 2006
In our opinion, based on the work undertaken in the course of the audit:
• |
the information given in the Director's Report for the financial year for which the financial statements are prepared is consistent with the financial statements; and |
• |
the Director's Report has been prepared in accordance with applicable legal requirements. |
Matters on which we are required to report by exception
In the light of our knowledge and understanding of the company and its environment obtained in the course of the audit, we have not identified material misstatements in the Director's 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 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 the director
As explained more fully in the Statement of Director's Responsibilities set out on page 5, the director is 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 director determines 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 director is 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 director either intends to liquidate the company or to cease operations, or have no realistic alternative but to do so.
Auditor 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.
The extent to which our procedures are capable of detecting irregularities, including fraud is detailed below:
Mediamonks London Limited
Independent Auditor's Report to the Members of Mediamonks London Limited
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. Our approach to identifying and assessing the risks of material misstatement in respect of irregularities, including fraud and non-compliance with laws and regulations, was as follows:
• the engagement partner ensured that the engagement team collectively had the appropriate competence, capabilities and skills to identify or recognise non-compliance with applicable laws and regulations;
• we identified the laws and regulations applicable to the company through discussions with directors and other management, and from our commercial knowledge and experience of the advertising sector;
• we focused on specific laws and regulations which we considered may have a direct material affect on the financial statements or the operations of the company, including the Companies Act 2006, taxation legislation, and health and safety legislation;
• we assessed the extent of compliance with the laws and regulations identified above through making enquiries of management and inspecting legal correspondence; and
• identified laws and regulations were communicated within the audit team regularly and the team remained alert to instances of non-compliance throughout the audit.
We assessed the susceptibility of the company’s financial statements to material misstatement, including obtaining an understanding of how fraud might occur, by;
• making enquiries of management as to where they considered there was susceptibility to fraud, their knowledge of actual, suspected and alleged fraud; and
• considering the internal controls in place to mitigate risks of fraud and non-compliance with laws and regulations.
To address the risk of fraud through management bias and override of controls, we:
• performed analytical procedures to identify any unusual or unexpected relationships;
• tested journal entries to identify unusual transactions;
• assessed whether judgements and assumptions made in determining the accounting estimates were indicative of potential bias; and
• investigated the rationale behind significant or unusual transactions.
In response to the risk of irregularities and non-compliance with laws and regulations, we designed procedures which included, but were not limited to:
• agreeing financial statement disclosures to underlying supporting documentation;
• enquiring of management as to actual and potential litigation and claims.
There are inherent limitations in our audit procedures described above. The more removed that laws and regulations are from financial transactions, the less likely it is that we would become aware of non-compliance. Auditing standards also limit the audit procedures required to identify non-compliance with laws and regulations to enquiry of the directors and other management and the inspection of regulatory and legal correspondence, if any.
Material misstatements that arise due to fraud can be harder to detect than those that arise from error as they may
involve deliberate concealment or collusion.
Mediamonks London Limited
Independent Auditor's Report to the Members of Mediamonks London Limited
A further description of our responsibilities is available on the Financial Reporting Council’s website at: 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.
......................................
For and on behalf of
3 Warners Mill
Silks Way
Essex
CM7 3GB
Mediamonks London Limited
Income Statement for the Year Ended 31 December 2022
Note |
2022 |
2021 |
|
Revenue |
|
|
|
Cost of sales |
( |
( |
|
Gross profit |
|
|
|
Administrative expenses |
( |
( |
|
Other operating income |
|
- |
|
Operating profit |
|
|
|
Finance costs |
( |
( |
|
Profit before tax |
|
|
|
Tax expense |
( |
( |
|
Profit for the year |
|
|
The above results were derived from continuing operations.
Mediamonks London Limited
Statement of Comprehensive Income for the Year Ended 31 December 2022
2022 |
2021 |
|
Profit for the year |
|
|
Total comprehensive income for the year |
|
|
Mediamonks London Limited
(Registration number: 08333698)
Statement of Financial Position as at 31 December 2022
Note |
31 December |
31 December |
|
Assets |
|||
Non-current assets |
|||
Property, plant and equipment |
|
|
|
Right of use assets |
|
|
|
Deferred tax assets |
|
|
|
|
|
||
Current assets |
|||
Trade and other receivables |
|
|
|
Corporation tax |
|
- |
|
Cash and cash equivalents |
|
|
|
11,389,789 |
7,545,452 |
||
Total assets |
|
|
|
Current liabilities |
|||
Trade and other payables |
|
|
|
Corporation tax liability |
- |
|
|
Right of use liability |
|
|
|
11,062,790 |
5,569,419 |
||
Net current assets |
326,999 |
1,976,033 |
|
Total assets less current liabilities |
16,642,346 |
2,957,216 |
|
Non-current liabilities |
|||
Provisions |
|
- |
|
Deferred tax provision |
|
|
|
Right of use liability |
|
|
|
|
|
||
Net assets |
4,148,377 |
2,601,435 |
|
Equity |
|||
Share capital |
100 |
100 |
|
Share premium |
2,000,000 |
- |
|
Capital contribution |
36,619 |
- |
|
Retained earnings |
2,111,658 |
2,601,335 |
|
Total equity and liabilities |
|
|
Mediamonks London Limited
(Registration number: 08333698)
Statement of Financial Position as at 31 December 2022
Approved by the
......................................... |
Mediamonks London Limited
Statement of Changes in Equity for the Year Ended 31 December 2022
Share capital |
Share premium |
Capital contribution |
Retained earnings |
Total |
|
At 1 January 2022 |
|
- |
- |
|
|
Profit for the year |
- |
- |
- |
|
|
Total comprehensive income |
- |
- |
- |
|
|
Dividends |
- |
- |
- |
( |
( |
Other share premium reserve movements |
- |
2,000,000 |
- |
- |
2,000,000 |
Share based payment transactions |
- |
- |
36,619 |
- |
36,619 |
At 31 December 2022 |
|
|
|
|
|
Share capital |
Share premium |
Capital contribution |
Retained earnings |
Total |
|
At 1 January 2021 |
|
- |
- |
|
|
Profit for the year |
- |
- |
- |
|
|
Total comprehensive income |
- |
- |
- |
|
|
At 31 December 2021 |
100 |
- |
- |
2,601,335 |
2,601,435 |
The share premium reserve movement in the year relates to the write off of an intercompany loan with S4 Capital UK Holdings Limited as an investment in Mediamonks London Limited.
Mediamonks London Limited
Statement of Cash Flows for the Year Ended 31 December 2022
2022 |
2021 |
|
Cash flows from operating activities |
||
Profit for the year |
|
|
Adjustments to cash flows from non-cash items |
||
Depreciation and amortisation |
|
|
Depreciation on right of use assets |
3,005,322 |
365,790 |
Loss on disposal of property plant and equipment |
|
- |
Finance costs |
|
|
Share based payment transactions |
36,619 |
- |
Tax expense |
|
|
|
|
|
Working capital adjustments |
||
Increase in trade and other receivables |
( |
( |
Increase in trade and other payables |
|
|
Cash generated from operations |
|
|
Tax paid |
( |
( |
Net cash flow from operating activities |
|
( |
Cash flows from investing activities |
||
Acquisitions of property plant and equipment |
( |
( |
Proceeds from sale of property plant and equipment |
|
- |
Right of use lease premiums and rental payments |
( |
( |
Net cash flows from investing activities |
( |
( |
Cash flows from financing activities |
||
Interest paid |
( |
( |
Investment in company by group member |
2,000,000 |
- |
Dividends paid |
( |
- |
Net cash flows from financing activities |
|
( |
Net increase/(decrease) in cash and cash equivalents |
|
( |
Cash and cash equivalents at 1 January |
434,813 |
1,246,768 |
Cash and cash equivalents at 31 December |
2,052,282 |
434,813 |
Mediamonks London Limited
Notes to the Financial Statements for the Year Ended 31 December 2022
General information |
The company is a private company limited by share capital, incorporated and domiciled in England and Wales.
The address of its registered office is:
United Kingdom
These financial statements were authorised for issue by the
Accounting policies |
Statement of compliance
The company financial statements have been prepared in accordance with International Financial Reporting Standards and its interpretations adopted by the UK ("adopted IFRS's").
Summary of material accounting policies and key accounting estimates
The principal accounting policies applied in the preparation of these financial statements are set out below. These policies have been consistently applied to all the years presented, unless otherwise stated.
Basis of preparation
The financial statements have been prepared in accordance with adopted IFRSs and under historical cost accounting rules.
The preparation of financial statements, in compliance with IFRS requires the use of certain critical accounting estimates. It also requires management to exercise its judgement in the process of applying the company's accounting policies.
These financial statements are presented in Sterling (£), which is the company's functional currency.
New standards, interpretations and amendments effective
There are no new standards, interpretations or amendments effective in the year that have had a material impact on the financial statements.
New standards, interpretations and amendments effective
There are a number of new standards, amendments to standards and interpretations which have been issued by the IASB that are effective in future accounting periods. The company has reviewed these issues and do not expect them to have a material impact on future financial statements.
Mediamonks London Limited
Notes to the Financial Statements for the Year Ended 31 December 2022
Revenue recognition
The company produces digital campaigns, films, creative content, platforms and E- commerce for home grown and international brands. The company has three principal operating segments which are assets at scale, platform and E- commerce and creative content and innovation. Projects in the assets at scale have, on average a one to two month duration and have a mix of fixed pricing and projects on an actual time spend basis. The focus of the platform and E-commerce pillar is on retaining repeat work with longer lasting characteristics with prices that are mostly based on actual time spent. The characteristics of the projects on the creative content and innovation pillar include a life cycle of two to four months and fixed prices.
Revenue is recognised as a performance obligation is satisfied in accordance with terms of the contractual agreement. Typically, performance obligations are satisfied over time as services are rendered. Revenue recognised over time is based on the proportion of level of service performed.
The company determines all the separate performance obligations within the customer's contract at contract inception. The company determines at contract inception whether each performance obligation will be satisfied (that is when control will be transferred) over time or at a point in time. In general, the company satisfies a performance obligation and recognises revenue over time, as the asset has no alternative use to the company and the company is entitled to payment for performance to date. The asset for each project is produced to the customer's specification and the asset can only be used by the customer.
For each performance obligation that is satisfied over time, revenue is recognised by measuring progress towards completion of that performance obligation. Revenue recognised over time is based on the proportion of the level of services performed. For most contracts, costs incurred are used as an objective input measure of performance. The primary input of substantially all work performed under these contracts is labour.
If profit on the project can be determined reliably, revenue is recognised in proportion to the services provided at reporting date. Otherwise, revenue is recognised based on the cost incurred.
Where the total project costs exceed the project revenue, the loss is recognised in the cost of sales in the income statement.
For projects which are sold on a time and material basis and meet the criteria of recognising revenue over time, the revenue is recognised as the service is performed at the rate contracted on a time and material basis.
Accrued income and deferred income arising on contracts is included in trade and other receivables as accrued income and in trade and other payables as deferred income as appropriate.
Revenue is recognised net of Value added tax when the revenue criteria as disclosed above for each contract has been met.
Foreign currency transactions and balances
Tax
Current Tax is recognised in the profit and loss account, except that a change attributable to an item of income or expense recognised as other comprehensive income is also recognised directly in other comprehensive income.
The current income tax charge is calculated on the basis of tax rates and laws that have been enacted or substantively enacted by the reporting date in the countries where the company operates and generates taxable income.
Mediamonks London Limited
Notes to the Financial Statements for the Year Ended 31 December 2022
Deferred tax is recognised on material temporary differences arising between the tax bases of assets and liabilities and their carrying amounts in the financial statements and on unused tax losses or tax credits in the company. Deferred tax is determined using tax rates and laws that have been enacted or substantively enacted by the reporting date.
The carrying amount of deferred tax assets are reviewed at each reporting date and a valuation allowance is set up against deferred tax assets so that the net carrying amount equals the highest amount that is more likely than not to be recovered based on current or future taxable profit.
Tangible assets
Property, plant and equipment is stated in the statement of financial position at cost, less any subsequent accumulated depreciation and subsequent accumulated impairment losses.
Depreciation
Depreciation is charged so as to write off the cost of assets, other than land and properties under construction over their estimated useful lives, as follows:
Asset class |
Depreciation method and rate |
Office equipment |
33% Straight Line Method |
Fixtures and fittings |
20% Straight Line Method |
Improvements to property |
Over the term of the lease |
Right of use asset
Leases are accounted for by recognising a right of use asset and a lease liability.
Lease liabilities are measured at the present value of the contractual payments due to the lessor over the lease term, with the discount rate determined by reference to the bank borrowings offered by the company's bankers.
Right of use assets are initially measured at the amount of the lease liability, reduced for any lease incentives received, and increased for:
· lease payments made at or before commencement of the lease;
· initial direct costs incurred; and
Subsequent to initial measurement lease liabilities increase as a result of interest charged at a constant rate on the balance outstanding and are reduced for lease payments made. Right-of-use assets are amortised on a straight-line basis over the remaining term of the lease or over the remaining economic life of the asset if, rarely, this is judged to be shorter than the lease term.
Cash and cash equivalents
Cash and cash equivalents comprise cash on hand and call deposits.
Cash flow statement
The cash flow statement is prepared using the indirect method. The cash and cash equivalents in the cash flow statement comprise cash and cash equivalents. Cash flows denominated in foreign currencies are converted based on average exchange rates.
Income taxes paid and received are included in cash flows from operating activities. Principal elements of lease payments are included in cash flows from financing activities. Transactions not resulting in inflow or outflow of cash are not included in the cash flow statement.
Trade receivables
Trade receivables are amounts due from customers for digital services performed in the ordinary course of business.
Trade receivables are recognised initially at the transaction price. A provision for the impairment of trade receivables is established when there is objective evidence that the company will not be able to collect all amounts due according to the original terms of the receivables.
Mediamonks London Limited
Notes to the Financial Statements for the Year Ended 31 December 2022
Trade payables
Trade payables are obligations to pay for goods or services that have been acquired in the ordinary course of business from suppliers. Accounts payable are classified as current liabilities if the company does not have an unconditional right, at the end of the reporting period, to defer settlement of the payable for at least twelve months after the reporting date. If there is an unconditional right to defer settlement for at least twelve months after the reporting date, they are presented as non-current liabilities.
Trade payable are recognised initially at the transaction price.
Provisions
Provisions are recognised when the company has a present obligation (legal or constructive) 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.
Provisions are measured at the directors’ best estimate of the expenditure required to settle the obligation at the reporting date and are discounted to present value where the effect is material.
Share capital
Ordinary shares are classified as equity. Equity instruments are measured at the fair value of the cash or other resources received or receivable, net of the direct costs of issuing the equity instruments.
Dividends
Dividend distribution to the company’s shareholders is recognised as a liability in the company’s financial statements in the period in which the dividends are approved by the company’s shareholders.
Defined contribution pension obligation
A defined contribution plan is a pension plan under which fixed contributions are paid into a separate entity and has no legal or constructive obligations to pay further contributions if the fund does not hold sufficient assets to pay all employees the benefits relating to employee service in the current and prior periods.
For defined contribution plans contributions are paid publicly or privately administered pension insurance plans on a mandatory or contractual basis. The contributions are recognised as employee benefit expense when they are due. If contribution payments exceed the contribution due for service, the excess is recognised as an asset.
Financial instruments
Initial recognition
Financial assets and financial liabilities comprise all assets and liabilities reflected in the statement of financial position, although excluding property, plant and equipment, investment properties, intangible assets, deferred tax assets, prepayments, deferred tax liabilities and employee benefits plan.
The company recognises financial assets and financial liabilities in the statement of financial position when, and only when, the company becomes party to the contractual provisions of the financial instrument.
Financial assets are initially recognised at fair value. Financial liabilities are initially recognised at fair value, representing the proceeds received net of premiums, discounts and transaction costs that are directly attributable to the financial liability.
Subsequent to initial measurement, financial assets and financial liabilities are measured at either amortised cost or fair value.
Mediamonks London Limited
Notes to the Financial Statements for the Year Ended 31 December 2022
Classification and measurement
Financial instruments are classified at inception into one of the following categories, which then determine the subsequent measurement methodology:-
Financial assets are classified into one of the following three categories:-
· financial assets at amortised cost;
· financial assets at fair value through other comprehensive income (FVTOCI); or
· financial assets at fair value through the profit or loss (FVTPL).
Financial liabilities are classified into one of the following two categories:-
· financial liabilities at amortised cost; or
· financial liabilities at fair value through the profit or loss (FVTPL).
The classification and the basis for measurement are subject to the company’s business model for managing the financial assets and the contractual cash flow characteristics of the financial assets, as detailed below:-
Financial assets at amortised cost
A financial asset is measured at amortised cost if it meets both of the following conditions and is not designated as at FVTPL:-
· the assets are held within a business model whose objective is to hold assets in order to collect contractual cash flows; and
· the contractual terms of the financial assets give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding.
If either of the above two criteria is not met, the financial assets are classified and measured at fair value through the profit or loss (FVTPL).
If a financial asset meets the amortised cost criteria, the company may choose to designate the financial asset at FVTPL. Such an election is irrevocable and applicable only if the FVTPL classification significantly reduces a measurement or recognition inconsistency.
Financial assets at fair value through other comprehensive income (FVTOCI)
A financial asset is measured at FVTOCI only if it meets both of the following conditions and is not designated as at FVTPL:-
· the asset is held within a business model whose objective is achieved by both collecting contractual cash flows and selling financial assets; and
· the contractual terms of the financial assets give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding.
On initial recognition of an equity investments that is not held for trading, the company may irrevocably elect to present subsequent changes in fair value in OCI. This election is made on an investment-by-investment basis.
If an equity investment is designated as FVTOCI, all gains and losses, except for dividend income, are recognised in other comprehensive income and are not subsequently included in the statement of income.
Financial assets at fair value through the profit or loss (FVTPL)
Financial assets not otherwise classified above are classified and measured as FVTPL.
Financial liabilities at amortised cost
All financial liabilities, other than those classified as financial liabilities at FVTPL, are measured at amortised cost using the effective interest rate method.
Financial liabilities at fair value through the profit or loss
Financial liabilities not measured at amortised cost are classified and measured at FVTPL. This classification includes derivative liabilities.
Mediamonks London Limited
Notes to the Financial Statements for the Year Ended 31 December 2022
Derecognition
Financial assets
The company derecognises a financial asset when;
- the contractual rights to the cash flows from the financial asset expire,
- it transfers the right to receive the contractual cash flows in a transaction in which substantially all of the risks and rewards of ownership of the financial asset are transferred; or
- the company neither transfers nor retains substantially all of the risks and rewards of ownership and it does not retain control of the financial asset.
On derecognition of a financial asset, the difference between the carrying amount of the asset and the sum of the consideration received is recognised as a gain or loss in the profit or loss.
Any cumulative gain or loss recognised in OCI in respect of equity investment securities designated as FVTOCI is not recognised in profit or loss on derecognition of such securities. Any interest in transferred financial assets that qualify for derecognition that is created or retained by the company is recognised as a separate asset or liability.
The company enters into transactions whereby it transfers assets recognised on its statement of financial position, but retains either all or substantially all of risks and rewards of the transferred assets or a portion of them. In such cases, the transferred assets are not derecognised.
When the company derecognises transferred financial assets in their entirety, but has continuing involvement in them then the entity should disclose for each type of continuing involvement at the reporting date:
(a) The carrying amount of the assets and liabilities that are recognised in the entity’s statement of financial position and represent the entity’s continuing involvement in the derecognised financial assets, and the line items in which those assets and liabilities are recognised.
(b) The fair value of the assets and liabilities that represent the entity’s continuing involvement in the derecognised financial assets;
(c) The amount that best represents the entity’s maximum exposure to loss from its continuing involvement in the derecognised financial assets, and how the maximum exposure to loss is determined
(d) The undiscounted cash outflows that would or may be required to repurchase the derecognised financial assets or other amounts payable to the transferee for the transferred assets
Financial liabilities
The company derecognises a financial liability when its contractual obligations are discharged, cancelled, or expire.
Modification of financial assets and financial liabilities
Financial assets
If the terms of a financial asset are modified, the company evaluates whether the cash flows of the modified asset are substantially different. If the cash flows are substantially different, then the contractual rights to the cash flows from the original financial asset are deemed to expire. In this case the original financial asset is derecognised and a new financial asset is recognised at either amortised cost or fair value.
If the cash flows are not substantially different, then the modification does not result in derecognition of the financial asset. In this case, the company recalculates the gross carrying amount of the financial asset and recognises the amount arising from adjusting the gross carrying amount as a modification gain or loss in the statement of income.
Mediamonks London Limited
Notes to the Financial Statements for the Year Ended 31 December 2022
Financial liabilities
If the terms of financial liabilities are modified, the company evaluates whether the cash flows of the modified asset are substantially different. If the cash flows are substantially different, then the contractual obligations from the cash flows from the original financial liabilities are deemed to expire. In this case the original financial liabilities are derecognised and new financial liabilities are recognised at either amortised cost or fair value.
If the cash flows are not substantially different, then the modification does not result in derecognition of the financial liabilities. In this case, the company recalculates the gross carrying amount of the financial liabilities and recognises the amount arising from adjusting the gross carrying amount as a modification gain or loss in the statement of income.
Impairment of financial assets
Measurement of Expected Credit Losses
For trade receivables, the company applies the simplified approach, which requires expected lifetime losses to be recognised from initial recognition of the receivables.
The expected loss rates are based on the payment profiles of sales over a period before 31 December 2022 and the corresponding historical credit losses experienced within this period. The historical loss rates are adjusted to reflect current and forward-looking information on macroeconomic factors affecting the ability of the customers to settle the receivables.
Critical accounting judgements and key sources of estimation uncertainty |
The preparation of the Company's financial statements requires management to make judgements, estimates and assumptions that affect the reported amounts of revenues, expenses, assets and liabilities, and the accompanying disclosures. Uncertainty about these assumptions and estimates could result in outcomes that require a material adjustment to the carrying amount of asset or liability affected in future periods.
The key assumptions concerning the future and other key sources of estimation uncertainty at the reporting date, that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year, are described below. The company based its assumptions and estimates on parameters when the financial statements were prepared. Existing circumstances and assumptions about future developments, may change due to market changes or circumstances arising that are beyond the control of the Company. Such changes are reflected in the assumptions when they occur.
Provision for expected credit losses of trade receivables
The company applies the IFRS 9 simplified approach to measure expected credit losses. The company exercises judgement in determining credit losses. In this judgement the company has considered credit losses and has included a provision as necessary.
A credit impairment is recognised when there is objective evidence that the company will not be able to collect all amounts due according to original terms of the receivables.
Evidence of impairment includes significant financial difficulties of the receivable balances, probability that the receivable will enter bankruptcy or financial reorganisation.
The carrying amount of the asset is either reduced through the use of a credit allowance or directly written off when there is no expectation of future recoverability. Should an expense need to be recognised for any credit allowance it would be recognised in the Income statement.
Mediamonks London Limited
Notes to the Financial Statements for the Year Ended 31 December 2022
Work in progress and revenue recognition
The company applies IFRS 15 Revenue from contracts with customers. The company exercises judgement in determing the amount of work completed at the balance sheet date. As at 31 December 2022 the project managers assess the percentage complete on each contract in progress to determine the level of revenue to be reported within the income statement and accrued/ deferred income in the statement of the financial position.
Further details regarding revenue recognition are included in the accounting policy for revenue recognition.
There are no other critical accounting estimates and judgements leading to material impact to the financial statements.
Revenue |
The analysis of the company's revenue for the year from continuing operations is as follows:
2022 |
2021 |
|
Sale of creative digital production services |
|
|
Finance income and costs |
2022 |
2021 |
|
Finance costs |
||
Interest on bank overdrafts and borrowings |
|
|
Interest expenses on other liabilities |
4,772 |
- |
Interest expenses on right of use assets |
545,873 |
42,094 |
Total finance costs |
|
|
Staff costs |
The aggregate payroll costs (including directors' remuneration) were as follows:
2022 |
2021 |
|
Wages and salaries |
|
|
Social security costs |
|
|
Pension costs, defined contribution scheme |
|
|
Other employee expense |
|
|
|
|
The average number of persons employed by the company (including the director) during the year, analysed by category was as follows:
2022 |
2021 |
|
Sales, support and production |
|
|
Directors |
|
|
|
|
Mediamonks London Limited
Notes to the Financial Statements for the Year Ended 31 December 2022
Auditors' remuneration |
2022 |
2021 |
|
Audit of these financial statements |
|
|
Property, plant and equipment |
Improvements to property |
Office Equipment |
Fixtures and fittings |
Total |
|
Cost or valuation |
||||
At 1 January 2021 |
|
|
|
|
Additions |
- |
|
- |
|
At 31 December 2021 |
|
|
|
|
At 1 January 2022 |
|
|
|
|
Additions |
|
|
- |
|
Disposals |
- |
( |
- |
( |
At 31 December 2022 |
|
|
|
|
Depreciation |
||||
At 1 January 2021 |
|
|
|
|
Charge for year |
|
|
|
|
At 31 December 2021 |
|
|
|
|
At 1 January 2022 |
|
|
|
|
Charge for the year |
|
|
|
|
Eliminated on disposal |
- |
( |
- |
( |
At 31 December 2022 |
|
|
|
|
Carrying amount |
||||
At 31 December 2022 |
|
|
|
|
At 31 December 2021 |
|
|
|
|
At 1 January 2021 |
|
|
|
|
Mediamonks London Limited
Notes to the Financial Statements for the Year Ended 31 December 2022
Right of use assets |
Property |
Total |
|
Cost or valuation |
||
At 1 January 2021 |
|
|
At 31 December 2021 |
|
|
At 1 January 2022 |
|
|
Additions |
|
|
Disposals |
( |
( |
At 31 December 2022 |
|
|
Depreciation |
||
At 1 January 2021 |
|
|
Charge for year |
|
|
At 31 December 2021 |
|
|
At 1 January 2022 |
|
|
Charge for the year |
|
|
Eliminated on disposal |
( |
( |
At 31 December 2022 |
|
|
Carrying amount |
||
At 31 December 2022 |
|
|
At 31 December 2021 |
|
|
Lease liabilities
Property |
Total |
|
At 1 January 2021 |
1,104,274 |
1,104,274 |
Interest expense |
41,749 |
41,749 |
Lease payments |
(526,078) |
(526,078) |
At 31 December 2021 |
619,945 |
619,945 |
At 1 January 2022 |
619,945 |
619,945 |
Additions |
17,295,250 |
17,295,250 |
Interest expense |
545,873 |
545,873 |
Lease payments |
(3,000,027) |
(3,000,027) |
At 31 December 2022 |
15,461,041 |
15,461,041 |
Mediamonks London Limited
Notes to the Financial Statements for the Year Ended 31 December 2022
2022 |
2021 |
|
Due within one year |
3,667,283 |
332,792 |
Due in more than one year |
11,793,758 |
287,153 |
15,461,041 |
619,945 |
A maturity analysis of lease liabilities based on undiscounted gross cash flow is reported in the table below:
31 December |
31 December |
|
Less than one year |
4,121,109 |
423,794 |
1-2 years |
4,032,140 |
289,486 |
2-5 years |
8,677,803 |
- |
Total lease liabilities (undiscounted) |
|
|
Trade and other receivables |
Current |
31 December |
31 December |
Trade receivables |
|
|
Receivables from related parties |
|
|
Prepayments |
|
|
Other receivables |
|
|
|
|
The company's exposure to credit and market risks, including maturity analysis, relating to trade and other receivables is disclosed in note 21 "Financial risk review".
Cash and cash equivalents |
31 December |
31 December |
|
Cash at bank |
|
|
Mediamonks London Limited
Notes to the Financial Statements for the Year Ended 31 December 2022
Provisions |
Provisions |
Total |
|
Leasehold dilapidation |
|
|
At 31 December 2022 |
|
|
|
Leasehold dilapidations relate to the estimated cost of returning the leasehold properties to its original state at the end of the lease in accordance with the lease terms. The cost is recognised as depreciation of leasehold improvements over the remaining term of the lease. The main uncertainty relates to estimating the cost that will be incurred at the end of the lease.
Trade and other payables |
31 December |
31 December |
|
Trade payables |
|
|
Accrued expenses |
|
|
Amounts due to related parties |
|
|
Social security and other taxes |
|
|
Other payables |
|
|
Trade and other payables |
7,395,507 |
5,224,498 |
The company's exposure to market and liquidity risks, including maturity analysis, related to trade and other payables is disclosed in note 21 "Financial risk review".
Pension and other schemes |
Defined contribution pension scheme
The company operates a defined contribution pension scheme. The pension cost charge for the year represents contributions payable by the company to the scheme and amounted to £547,234 (2021 - £331,965).
Mediamonks London Limited
Notes to the Financial Statements for the Year Ended 31 December 2022
Income tax |
Tax charged/(credited) in the income statement
2022 |
2021 |
|
Current taxation |
||
UK corporation tax |
|
|
UK corporation tax adjustment to prior periods |
- |
( |
|
|
|
Deferred taxation |
||
Arising from origination and reversal of temporary differences |
|
( |
Tax expense in the income statement |
|
|
The tax on profit before tax for the year is the same as the standard rate of corporation tax in the UK (2021 - the same as the standard rate of corporation tax in the UK) of 19% (2021 - 19%).
The differences are reconciled below:
2022 |
2021 |
|
Profit before tax |
|
|
Corporation tax at standard rate |
|
|
Under provision in prior periods |
- |
( |
Decrease from effect of capital allowances in excess of depreciation |
( |
( |
Increase from effect of expenses not deductible in determining taxable profit (tax loss) |
|
|
Decrease arising from group relief tax |
( |
- |
Movement in Deferred tax |
|
( |
Total tax charge |
|
|
Mediamonks London Limited
Notes to the Financial Statements for the Year Ended 31 December 2022
Deferred tax
Deferred tax assets and liabilities
Deferred tax movement during the year:
At 1 January 2022 |
Recognised in income |
At |
|
Accelerated tax depreciation |
( |
|
( |
Provisions |
|
( |
|
|
( |
( |
Deferred tax movement during the prior year:
At 1 January 2021 |
Recognised in income |
At |
|
Accelerated tax depreciation |
( |
( |
( |
Provisions |
|
|
|
( |
|
|
Share capital |
Allotted, called up and fully paid shares
31 December |
31 December |
|||
No. |
£ |
No. |
£ |
|
|
|
100 |
|
100 |
Rights, preferences and restrictions
Ordinary £1 shares have the following rights, preferences and restrictions: |
Mediamonks London Limited
Notes to the Financial Statements for the Year Ended 31 December 2022
Reserves |
Share Capital
Called up share capital represents the nominal value of the shares issued.
Share premium
Amount subscribed for share capital in excess of nominal value.
Capital contribution
Amounts transferred on redemption of share options.
Accumulated profit
All other net gains and losses and transactions with owners (e.g. dividends) not recognised elsewhere.
Share-based payments |
Scheme details and movements
The movements in the number of share options during the year were as follows:
31 December |
31 December |
|
Granted during the period |
|
- |
Outstanding, end of period |
|
- |
|
The movements in the weighted average exercise price of share options during the year were as follows:
31 December |
31 December |
|
Granted during the period |
|
- |
Outstanding, end of period |
|
- |
|
Mediamonks London Limited
Notes to the Financial Statements for the Year Ended 31 December 2022
Outstanding share options
Details of share options outstanding at the end of the year are as follows:
31 December |
31 December |
|
Weighted average exercise price (£) |
1.30 |
- |
Number of share options outstanding |
277,335 |
- |
Expected weighted average remaining life (years) |
1.84 |
- |
|
The option pricing model used was is based upon fair value on grant date, which is determined by the market price on that date or the application of a Black-Scholes model, depending upon the characteristics of the scheme concerned. The assumptions underlying the Black-Scholes model are detailed below.
- Market price on any given day is obtained from external, publicly available sources.
- Expected life is the weighted average life across all shares granted.
- Expected volatility is sourced from external market data and represents the historical volatility of share prices of comparable company datasets over a period equivalent tothe expected option life.
Dividends |
Final dividends paid
31 December |
31 December |
|||
Final dividend of £ |
|
- |
||
Commitments |
Capital commitments
The total amount contracted for but not provided in the financial statements was £
Mediamonks London Limited
Notes to the Financial Statements for the Year Ended 31 December 2022
Financial risk review |
The company is exposed through its operations to the following financial risks:
- Credit risk
- Liquidity risk
- Market risk
In common with all other businesses, the company is exposed to risks from its use of financial instruments. This note describes the objectives, policies and processes for managing those risks and the methods used to measure them. Further quantitative information in respect of these risks is presented throughout these financial statements.
There have been no substantive changes in the exposure to financial instrument risks, its objectives, policies and processes for managing those risk.
The principal financial instruments used by the company, from which financial instruments risk arises, are as follows:
- Trade receivables
- Cash and cash equivalents
- Trade and other payables
Credit risk
The company's definition of credit risk is the risk of default on a debt due from a customer. This risk is mainly associated with the accounts receivable resulting from the Company's operations. This risk is monitored on a regular basis by the Company with the aim of:
- Ensure compliance with defined payment policy;
- Evaluation of credit granted to each customer;
- Analyse the financial conditions of its customers on a regular basis.
An impairment analysis is performed at each reporting date on an individual basis. The Company evaluates the collectability and recognises an impairment on a case by case basis.
The Company evaluates the concentration of risk with respect to trade receivables as low.
Liquidity risk
The company's definition of liquidity risk is the risk that the company cannot afford to pay its debts as they fall due. The Company's policy to manage liquidity is to ensure, as far as possible, that it will always have sufficient liquidity to meet its liabilities when due, under both normal and stress conditions.
Mediamonks London Limited
Notes to the Financial Statements for the Year Ended 31 December 2022
Market risk
Market risk is the risk that the fair value of future cash flows of a financial instrument will fluctuate because of changes in market prices. Market risk comprises two main types of risk: currency risk and interest rate risk.
Foreign exchange risk
Transactional currency exposure arise when supply of services or purchases to/ from subsidiaries, clients and suppliers, are being settled in currencies other than the functional currency of the group. The company is part of a group which operates internationally and is therefore exposed to currency risk. The rates of exchange are dependent on market conditions.
Interest rate risk
Interest rate risk is the risk that the value of a financial instrument or cash flow associated with a financial instrument will fluctuate due to changes in market interest rates. Interest rate risk arises from interest bearing financial assets and liabilities that the company uses. The company is not exposed to any significant interest rate risk.
Mediamonks London Limited
Notes to the Financial Statements for the Year Ended 31 December 2022
Related party transactions |
Loans to related parties
2022 |
Entities with joint control or significant influence |
At start of period |
( |
Rendering of services |
|
Acqusition of services |
( |
Settlement of balances and loans |
(5,893,040) |
At end of period |
( |
|
2021 |
Entities with joint control or significant influence |
At start of period |
( |
Rendering of services |
|
Acqusition of services |
( |
Settlement of balances and loans |
8,192,196 |
At end of period |
( |
|
Parent and ultimate parent undertaking |
Relationship between entity and parents
The parent of the largest group in which these financial statements are consolidated is
The address of S4 Capital PLC is:
Non adjusting events after the financial period |
|