Company Registration No. 08291535 (England and Wales)
Outpost VFX Limited
Annual report and
group financial statements
for the year ended 31 March 2023
Outpost VFX Limited
Company information
Directors
Duncan McWilliam
Geraint Hixson
Roux Brits
Jeremy Thompson
(Appointed 6 February 2023)
Company number
08291535
Registered office
6th Floor Ocean 80
80 Holdenhurst Road
Bournemouth
BH8 8AQ
Independent auditor
Saffery LLP
Midland House
2 Poole Road
Bournemouth
Dorset
BH2 5QY
Outpost VFX Limited
Contents
Page
Strategic report
1 - 5
Directors' report
6
Directors' responsibilities statement
7
Independent auditor's report
8 - 11
Income statement
12
Group statement of comprehensive income
13
Group statement of financial position
14
Company statement of financial position
15
Group statement of changes in equity
16
Company statement of changes in equity
17
Group statement of cash flows
18
Notes to the financial statements
19 - 42
Outpost VFX Limited
Strategic report
For the year ended 31 March 2023
1

The directors present the strategic report for the year ended 31 March 2023.

Fair review of the business

Previously the company has reported its results as two product divisions of Film and Broadcast. We no longer consider that this divisional split is informative or meaningful. The company is providing services to support the production of large scale Episodic and Film productions. Content is typically commissioned for use across both platforms and customers are serving both markets simultaneously.

Market

Following the significant restrictions placed on content production as a result of the covid pandemic, demand recovered significantly during the year to March 2022 and this trend persisted into the year to March 2023. A shortage of available talent globally to meet demand had a major impact on the Visual effects (VFX) industry.

Given recent investments in flexible technology platforms the company has been able to expand capacity and capture increased market share. Content demand was particularly strong in TV Episodic as competition amongst streaming companies intensified.

Volumes of film production intended for theatrical release have increased in the year to March 2023 but still remain globally at a level below that pre covid epidemic.

Developments in VFX technology, capability and comparative economics continue to drive increased use of VFX in many productions as a percentage of footage and budget.

As noted and described elsewhere in these accounts, subsequent to the year end the global TV and Film production market has been impacted by industrial action leading to a period of reduced demand. The company is adapting to these changed circumstances with the benefit of additional support from its shareholders.(see notes 1.4 and 32).

Company development

The company has continued its strong growth path:

· Revenue grew over 100% in the year to March 2023

· Further funding was raised during the year to support expansion

· Studio capacity was expanded globally in all studios during the course of the year, though at the end of the year following a strategic review we made a decision to close our Outpost studio in the US and our Frontier studio in Canada. This was based on our decision to concentrate production capacity on our growing Outpost facilities in India, Canada and the UK.

· Significant ongoing investments continue in technology, production expertise and executive management.

Outpost VFX Limited
Strategic report (continued)
For the year ended 31 March 2023
2
Profitability

The business generated an operating loss of £4,151k (2022: £270k) after exceptional items of £3,583k. The operating loss before exceptional items was £567k.

Debt and operating leases

The company met all debt liabilities through the covid pandemic and has continued to comply with all debt obligations in FY23.

The company looks to use operating leases to manage the cash flow on production software licences. The payments are spread over the term of the licence.

Principal risks and uncertainties

The company faces business risks and uncertainties based on economic and market conditions.

In view of this, the directors are constantly reviewing strategy and plans for existing and potential new markets.

This table sets out the key risks that have been identified, with the company’s approach to mitigating those risks.

Risk

Impact on company

Mitigation

Global economic risk

Global downturn because of pandemic or political, economic or industrial unrest in the TV and Film industry.

The company has worked to develop flexible and responsive operational technology and appropriate employment practices to enable it to respond in a timely manner to any such significant changes.

Exposure to local economic factors

The company is in four countries currently. These are currently stable and economically stable democratic countries. Local actions such as removal of industry tax credits, restrictive employment practices and political instability may affect our clients decision to trade locally.

The company is constantly tracking key areas of risk in each location. The company has no property leases of 10 years or over and has early break clauses as part of the leases.

 

Outpost VFX Limited
Strategic report (continued)
For the year ended 31 March 2023
3

Risk

Impact on company

Mitigation

Market pricing

The market is established and clients have a strong understanding of expected pricing.

The company regularly reviews pricing to ensure that it maintains competitive while maintaining prices and margins.

During the year to March 2023 demand for VFX services is currently outstripping the growth in VFX skilled staff.

The company is continuously building on its global delivery platform combining technology, culture, and skills development to enable it to maintain highly competitive performance levels.

Market competitors

The market is competitive and there are major competitors with substantial share of market. There are also growing smaller companies competing on bids.

Barriers to entry to the market are significant. New entrants require network of relationships and to deploy significant technology to win and deliver sizable projects.

The company is continuously reviewing the market and adapting its business strategy to ensure that it is growing its market share.

The company continues to build on these key strategic areas to grow its competitive position.

Resourcing and recruitment

The VFX industry had a shortage of talent before covid. The growth in demand since covid has increased competition in the market.

The company has recruitment processes that focus on attracting experienced talent plus finding new talent to develop and grow.

The company has a unique culture that prioritises the working environment for artists and staff. This is an increasingly important factor in attracting staff in all markets.

India has a larger talent pool than other locations and is important to the company’s recruitment strategy.

Attracting industry leadership is also a fundamental element in the resourcing strategy.

The company has also formed a network of relationships with partners to help manage demand for resources.

Outpost VFX Limited
Strategic report (continued)
For the year ended 31 March 2023
4

Risk

Impact on company

Mitigation

Global inflation

The global economy is experiencing inflation levels not seen since the 1970’s. This impacts all business costs.

The company is constantly monitoring price changes and working with key suppliers. These are marginal opportunities to minimise the impact.

The key work will be to make our global platform as efficient as possible and maximise output while minimising costs. The company is building plans that will mitigate these effects.

Operations management

There are few opportunities for developing new products or market advantages; pricing is competitive and limited opportunities for advantage on price; and there is skills shortage in the market. The success of the company is based on its ability to manage operations as effectively and efficiently as possible.

The Directors are focused on providing the best tools to run the company as efficiently as possible.

The company has moved to a fully cloud based platform which brings operational and financial flexibility.

The company is also investing in operational systems and processes to give good information for decision making.

The executive and senior management teams globally and in all locations have been strengthened.

Foreign exchange risk

The system of tax credits is a key driver in the VFX industry. Tax credits are given by governments based on staff being located in state or country. It also requires the client and vendor to be located locally and billed locally.

OVFX operates a global platform so staff from any location can work on a project. There is a limited transaction risk.

The translation risk is more material because of the use of resources globally and because of the comparative size of the overseas operations compared to the parent company.

The economic risk is in respect of the ability to move funds freely around the Group. Some government foreign exchange controls limit the ability to relocate balances.

 

The transaction risk with client invoicing or supplier payments is minimised because of the need to be local. Receipts and payments are made in local currency.

The translation risk is particularly relevant for the new Indian entity because it operates as a service company to all group studios.

The company has forex facilities in place for transactional risk management.

Foreign exchange controls are in place in India. The company will comply with these requirements while managing cash flows efficiently.

 

Outpost VFX Limited
Strategic report (continued)
For the year ended 31 March 2023
5
Future developments and subsequent events

The business entered the FY24 trading year with continued strong growth and increasing levels of operating margin.

In May 2023 the Writers’ Guild of America announced strike action in which they were subsequently joined by the Screen Actors Guild. These disputes were not fully resolved until November 2023 and the volume of new content commissioned and therefore the demand for VFX services has and is expected to fall significantly over the second half of FY24.

Overall the business therefore expects revenue and profitability levels in FY24 to be comparable to those of FY23.

In response to falling demand the company has significantly reduced its employment levels over the course of FY24 to the date of these accounts and as outlined more fully in Note 32 has raised additional funding in February 2024 to support its future growth.

Financial instruments

The company has a normal level of exposure to price, credit, liquidity and cash flow risks arising from trading activities. While it had facilities in place in FY23 it did not execute any instruments.

Forex instruments may be used on specific project risks or in respect of India to minimise exposure to exchange rate volatility.

The company does not enter into any formally designated hedging arrangements.

Research and development

The company is currently undertaking research and development to improve its technical delivery capabilities and its operational platforms.

 

On behalf of the board

Jeremy Thompson
15 April 2024
Director
Outpost VFX Limited
Directors' report
For the year ended 31 March 2023
6

The directors present their annual report and financial statements for the year ended 31 March 2023.

Principal activities

The principal activity of the company continued to be that of producing visual effects for film, broadcasting and commercials.

Results and dividends

The results for the year are set out on page 12.

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

Directors

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

Duncan McWilliam
Geraint Hixson
Michael Bateman
(Resigned 30 June 2023)
Roux Brits
Robin Shenfield
(Resigned 12 May 2023)
Jeremy Thompson
(Appointed 6 February 2023)
Disabled persons

Applications for employment by disabled persons are always fully considered, bearing in mind the aptitudes of the applicant concerned. In the event of members of staff becoming disabled, every effort is made to ensure that their employment within the group continues and that the appropriate training is arranged. It is the policy of the group that the training, career development and promotion of disabled persons should, as far as possible, be identical to that of other employees.

Employee involvement

The group's policy is to consult and discuss with employees, through unions, staff councils and at meetings, matters likely to affect employees' interests.

 

Information about matters of concern to employees is given through information bulletins and reports which seek to achieve a common awareness on the part of all employees of the financial and economic factors affecting the group's performance.

 

There is no employee share scheme at present, but the directors are considering the introduction of such a scheme as a means of further encouraging the involvement of employees in the company's performance.

Statement of disclosure to auditor

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

On behalf of the board
Jeremy Thompson
15 April 2024
Director
Outpost VFX Limited
Directors' responsibilities statement
For the year ended 31 March 2023
7

The directors are responsible for preparing the Annual Report and the financial statements in accordance with applicable law and regulations.

 

Company law requires the directors to prepare financial statements for each financial year. Under that law the directors have elected to prepare the financial statements in accordance with United Kingdom Generally Accepted Accounting Practice (United Kingdom Accounting Standards and applicable law).

 

Under company law the directors must not approve the financial statements unless they are satisfied that they give a true and fair view of the state of affairs of the group and company, and of the profit or loss of the group for that period. In preparing these financial statements, the directors are required to:

 

 

The directors are responsible for keeping adequate accounting records that are sufficient to show and explain the group’s and company’s transactions and disclose with reasonable accuracy at any time the financial position of the group and company and enable them to ensure that the financial statements comply with the Companies Act 2006. They are also responsible for safeguarding the assets of the group and company and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.

Outpost VFX Limited
Independent auditor's report
To the members of Outpost VFX Limited
8

Qualified opinion

We have audited the financial statements of Outpost VFX Limited (the 'parent company') and its subsidiaries (the 'group') for the year ended 31 March 2023 which comprise the group income statement, the group statement of comprehensive income, the group statement of financial position, the company statement of financial position, the group statement of changes in equity, the company statement of changes in equity, the group statement of cash flows and notes to the financial statements, including significant accounting policies. The financial reporting framework that has been applied in their preparation is applicable law and United Kingdom Accounting Standards, including Financial Reporting Standard 102 The Financial Reporting Standard applicable in the UK and Republic of Ireland (United Kingdom Generally Accepted Accounting Practice).

In our opinion, except for the effects of the matter described in the Basis for Qualified Opinion paragraph, the financial statements:

Basis for qualified opinion

The financial statements include an amount of £1,796,406 within exceptional costs and accruals relating to restructuring costs, which at the reporting date had not been communicated to the parties involved. At 31 March 2023 there was no legal or constructive obligation to carry out the restructuring, and therefore does not meet the recognition criteria under Financial Reporting Standard 102. In addition, information on financial performance included in the strategic report includes the effect of the restructuring costs.

 

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 group and parent 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 qualified opinion.

Material uncertainty related to going concern

We draw attention to Note 1.4 in the financial statements, which indicates that the Group incurred a total comprehensive loss of £4,931,885 during the year ended 31 March 2023 and, as of that date, the group’s liabilities exceeded its total assets by £686,490. As stated in Note 1.4, these events or conditions, along with other matters as set forth in Note 1.4, indicate that a material uncertainty exists that may cast significant doubt on the group’s or the parent company’s ability to continue as a going concern. Our opinion is not modified in respect of this matter.

 

 

In auditing the financial statements, we have concluded that the directors’ use of the going concern basis of accounting in the preparation of the financial statements is appropriate. Our responsibilities and the responsibilities of the directors with respect to going concern are described in the relevant sections of this report.

Outpost VFX Limited
Independent auditor's report (continued)
To the members of Outpost VFX Limited
9

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.

 

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.

 

As described in the Basis for qualified opinion section of our report, our audit opinion is qualified for incorrect recognition of an accrual for a restructuring provision costs, which there was no legal or constructive obligation for at the reporting date. Information on the income statement included in the strategic report also includes the provision these costs and accordingly we have concluded that the other information is materially misstated for the same reason.

Opinions on other matters prescribed by the Companies Act 2006

Except for the matter described in the Basis for qualified opinion section of our report, in our opinion, based on the work undertaken in the course of the audit:

Matters on which we are required to report by exception

Except for the matter described in the Basis for qualified opinion section of our report, in the light of the knowledge and understanding of the group and the parent company and their environment obtained in the course of the audit, we have not identified material misstatements in the strategic report or the directors' report.

 

We have nothing to report in respect of the following matters in relation to which the Companies Act 2006 requires us to report to you if, in our opinion:

 

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 group and the parent company's ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the directors either intend to liquidate the group or the parent company or to cease operations, or have no realistic alternative but to do so.

Outpost VFX Limited
Independent auditor's report (continued)
To the members of Outpost VFX Limited
10
Auditor's responsibilities for the audit of the financial statements

Our objectives are to obtain reasonable assurance about whether the group and parent company 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 specific procedures for this engagement and the extent to which these are capable of detecting irregularities, including fraud are detailed below.

 

Identifying and assessing risks related to irregularities:

We assessed the susceptibility of the group and parent company’s financial statements to material misstatement and how fraud might occur, including through discussions with the directors, discussions within our audit team planning meeting, updating our record of internal controls and ensuring these controls operated as intended. We evaluated possible incentives and opportunities for fraudulent manipulation of the financial statements. We identified laws and regulations that are of significance in the context of the group and parent company by discussions with directors and by updating our understanding of the sector in which the group and parent company operates.

 

Laws and regulations of direct significance in the context of the group and parent company include The Companies Act 2006 and UK Tax legislation.

 

Audit response to risks identified

We considered the extent of compliance with these laws and regulations as part of our audit procedures on the related financial statement items including a review of group and parent company financial statement disclosures. We reviewed the parent company's records of breaches of laws and regulations, minutes of meetings and correspondence with relevant authorities to identify potential material misstatements arising. We discussed the parent company's policies and procedures for compliance with laws and regulations with members of management responsible for compliance.

During the planning meeting with the audit team, the engagement partner drew attention to the key areas which might involve non-compliance with laws and regulations or fraud. We enquired of management whether they were aware of any instances of non-compliance with laws and regulations or knowledge of any actual, suspected or alleged fraud. We addressed the risk of fraud through management override of controls by testing the appropriateness of journal entries and identifying any significant transactions that were unusual or outside the normal course of business. We assessed whether judgements made in making accounting estimates gave rise to a possible indication of management bias. At the completion stage of the audit, the engagement partner’s review included ensuring that the team had approached their work with appropriate professional scepticism and thus the capacity to identify non-compliance with laws and regulations and fraud.

There are inherent limitations in the audit procedures described above and the further removed non-compliance with laws and regulations is from the events and transactions reflected in the financial statements, the less likely we would become aware of it. Also, the risk of not detecting a material misstatement due to fraud is higher than the risk of not detecting one resulting from error, as fraud may involve deliberate concealment by, for example, forgery or intentional misrepresentations, or through collusion.

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.

Outpost VFX Limited
Independent auditor's report (continued)
To the members of Outpost VFX Limited
11

Use of our report

This report is made solely to the parent 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 parent company's members those matters we are required to state to them in an auditors 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 parent company and the parent company's members as a body, for our audit work, for this report, or for the opinions we have formed.

 

Roger Wareham (Senior Statutory Auditor)
For and on behalf of Saffery LLP
16 April 2024
Chartered Accountants
Statutory Auditors
Midland House
2 Poole Road
Bournemouth
Dorset
BH2 5QY
Outpost VFX Limited
Group income statement
For the year ended 31 March 2023
12
2023
2022
Notes
£
£
Turnover
3
40,251,966
19,077,908
Cost of sales
(28,552,833)
(12,523,717)
Gross profit
11,699,133
6,554,191
Administrative expenses
(12,275,822)
(6,824,636)
Other operating income
9,489
-
Exceptional items - Restructuring
4
(2,457,456)
-
0
Exceptional items - Impairments
4
(1,126,351)
-
0
Operating loss
5
(4,151,007)
(270,445)
Interest receivable and similar income
9
3,182
3,762
Interest payable and similar expenses
10
(311,922)
(139,755)
Loss before taxation
(4,459,747)
(406,438)
Tax on loss
11
(401,752)
151,779
Loss for the financial year
(4,861,499)
(254,659)
Loss for the financial year is all attributable to the owners of the parent company.
Outpost VFX Limited
Group statement of comprehensive income
For the year ended 31 March 2023
13
2023
2022
£
£
Loss for the year
(4,861,499)
(254,659)
Other comprehensive income
Currency translation loss taken to retained earnings
(70,386)
(53,625)
Total comprehensive income for the year
(4,931,885)
(308,284)
Total comprehensive income for the year is all attributable to the owners of the parent company.
Outpost VFX Limited
Group statement of financial position
As at 31 March 2023
14
2023
2022
Notes
£
£
£
£
Fixed assets
Intangible assets
13
213,637
1,292,095
Tangible assets
14
1,064,285
677,191
1,277,922
1,969,286
Current assets
Debtors
17
7,586,662
4,825,582
Cash at bank and in hand
6,545,520
395,863
14,132,182
5,221,445
Creditors: amounts falling due within one year
18
(12,483,358)
(4,681,512)
Net current assets
1,648,824
539,933
Total assets less current liabilities
2,926,746
2,509,219
Creditors: amounts falling due after more than one year
19
(3,457,691)
(1,333,893)
Provisions for liabilities
Deferred tax liability
22
155,545
284,936
(155,545)
(284,936)
Net (liabilities)/assets
(686,490)
890,390
Capital and reserves
Called up share capital
25
326
285
Share premium account
8,277,039
4,922,075
Profit and loss reserves
(8,963,855)
(4,031,970)
Total equity
(686,490)
890,390
The financial statements were approved by the board of directors and authorised for issue on 15 April 2024 and are signed on its behalf by:
15 April 2024
Jeremy Thompson
Director
Outpost VFX Limited
Company statement of financial position
As at 31 March 2023
31 March 2023
15
2023
2022
Notes
£
£
£
£
Fixed assets
Intangible assets
13
205,243
1,292,095
Tangible assets
14
618,851
325,580
Investments
15
160,620
423,007
984,714
2,040,682
Current assets
Debtors
17
5,424,220
4,133,453
Cash at bank and in hand
3,033,910
41,299
8,458,130
4,174,752
Creditors: amounts falling due within one year
18
(4,398,261)
(2,998,561)
Net current assets
4,059,869
1,176,191
Total assets less current liabilities
5,044,583
3,216,873
Creditors: amounts falling due after more than one year
19
(3,142,893)
(1,051,295)
Provisions for liabilities
Deferred tax liability
22
155,545
284,936
(155,545)
(284,936)
Net assets
1,746,145
1,880,642
Capital and reserves
Called up share capital
25
326
285
Share premium account
8,277,039
4,922,075
Profit and loss reserves
(6,531,220)
(3,041,718)
Total equity
1,746,145
1,880,642

As permitted by s408 Companies Act 2006, the company has not presented its own profit and loss account and related notes. The company’s loss for the year was £3,489,502 (2022 - £1,907,634 loss).

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

The financial statements were approved by the board of directors and authorised for issue on 15 April 2024 and are signed on its behalf by:
15 April 2024
Jeremy Thompson
Director
Company Registration No. 08291535
Outpost VFX Limited
Group statement of changes in equity
For the year ended 31 March 2023
16
Share capital
Share premium account
Profit and loss reserves
Total
Notes
£
£
£
£
Balance at 1 April 2021
285
4,922,075
(3,723,686)
1,198,674
Year ended 31 March 2022:
Loss for the year
-
-
(254,659)
(254,659)
Other comprehensive income:
Currency translation differences
-
-
(53,625)
(53,625)
Total comprehensive income for the year
-
-
(308,284)
(308,284)
Balance at 31 March 2022
285
4,922,075
(4,031,970)
890,390
Year ended 31 March 2023:
Loss for the year
-
-
(4,861,499)
(4,861,499)
Other comprehensive income:
Currency translation differences
-
-
(70,386)
(70,386)
Total comprehensive income for the year
-
-
(4,931,885)
(4,931,885)
Issue of share capital
25
41
3,354,964
-
3,355,005
Balance at 31 March 2023
326
8,277,039
(8,963,855)
(686,490)
Outpost VFX Limited
Company statement of changes in equity
For the year ended 31 March 2023
17
Share capital
Share premium account
Profit and loss reserves
Total
Notes
£
£
£
£
Balance at 1 April 2021
285
4,922,075
(1,134,084)
3,788,276
Year ended 31 March 2022:
Loss and total comprehensive income for the year
-
-
(1,907,634)
(1,907,634)
Balance at 31 March 2022
285
4,922,075
(3,041,718)
1,880,642
Year ended 31 March 2023:
Loss and total comprehensive income for the year
-
-
(3,489,502)
(3,489,502)
Issue of share capital
25
41
3,354,964
-
3,355,005
Balance at 31 March 2023
326
8,277,039
(6,531,220)
1,746,145
Outpost VFX Limited
Group statement of cash flows
For the year ended 31 March 2023
18
2023
2022
Notes
£
£
£
£
Cash flows from operating activities
Cash generated from/(absorbed by) operations
29
2,277,129
(187,379)
Interest paid
(311,922)
(139,755)
Income taxes paid
(247,154)
(6,066)
Net cash inflow/(outflow) from operating activities
1,718,053
(333,200)
Investing activities
Purchase of intangible assets
(66,259)
(639,173)
Purchase of tangible fixed assets
(849,696)
(375,899)
Proceeds on disposal of tangible fixed assets
21,043
(3,731)
Receipts arising from loans made
3,806
-
Interest received
3,182
3,762
Net cash used in investing activities
(887,924)
(1,015,041)
Financing activities
Proceeds from issue of shares
3,355,005
-
Issue of convertible loans
2,000,000
-
Proceeds from borrowings
129,303
-
Repayment of borrowings
(300,977)
(199,561)
Payment of finance leases obligations
(23,225)
(77,259)
Net cash generated from/(used in) financing activities
5,160,106
(276,820)
Net increase/(decrease) in cash and cash equivalents
5,990,235
(1,625,061)
Cash and cash equivalents at beginning of year
395,863
2,005,694
Effect of foreign exchange rates
159,422
15,230
Cash and cash equivalents at end of year
6,545,520
395,863
Outpost VFX Limited
Notes to the group financial statements
For the year ended 31 March 2023
19
1
Accounting policies
Company information

Outpost VFX Limited (“the company”) is a private company limited by shares incorporated in England and Wales. The registered office is 6th Floor Ocean 80, 80 Holdenhurst Road, Bournemouth, Dorset, England, BH8 8AQ.

 

The group consists of Outpost VFX Limited and all of its subsidiaries.

1.1
Accounting convention

These financial statements have been prepared in accordance with FRS 102 “The Financial Reporting Standard applicable in the UK and Republic of Ireland” (“FRS 102”) and the requirements of the Companies Act 2006.

The financial statements are prepared in sterling, which is the functional currency of the company. Monetary amounts in these financial statements are rounded to the nearest £.

The financial statements have been prepared under the historical cost convention. The principal accounting policies adopted are set out below.

1.2
Business combinations

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

 

Deferred tax is recognised on differences between the value of assets (other than goodwill) and liabilities recognised in a business combination accounted for using the purchase method and the amounts that can be deducted or assessed for tax, considering the manner in which the carrying amount of the asset or liability is expected to be recovered or settled. The deferred tax recognised is adjusted against goodwill or negative goodwill.

1.3
Basis of consolidation

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

 

All financial statements are made up to 31 March 2023. Where necessary, adjustments are made to the financial statements of subsidiaries to bring the accounting policies used into line with those used by other members of the group.

 

All intra-group transactions, balances and unrealised gains on transactions between group companies are eliminated on consolidation. Unrealised losses are also eliminated unless the transaction provides evidence of an impairment of the asset transferred.

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

Outpost VFX Limited
Notes to the group financial statements (continued)
For the year ended 31 March 2023
1
Accounting policies (continued)
20
1.4
Going concern

At the approval date of the financial statements, it is the directors expectation that they have sufficient access to funds to continue trading for the foreseeable future.  Post year-end the business has been significantly impacted by the Writers Guild of America’s strike which has impacted the revenue pipeline of the whole sector and respective trade, resulting in losses in the 2024 year to date. The group implemented cost saving initiatives immediately to limit any loss and restructure the business along with additional funding having been secured, as disclosed in note 31, which is expected to support the business whilst the industry recovers. There remains however some uncertainty as to how quickly revenue will start to flow back to pre-strike levels and how quickly the business can recoup the losses incurred.

1.5
Turnover

Turnover is recognised at the fair value of the consideration received or receivable for goods and services provided in the normal course of business, and is shown net of VAT and other sales related taxes. The fair value of consideration takes into account trade discounts, settlement discounts and volume rebates.

Revenue from contracts for the provision of visual effects services is recognised by reference to the stage of completion when the stage of completion, costs incurred and costs to complete can be estimated reliably. The stage of completion is calculated by comparing costs incurred, mainly in relation to contractual hourly staff rates and materials, as a proportion of total costs. Where the outcome cannot be estimated reliably, revenue is recognised only to the extent of the expenses recognised that it is probable will be recovered.

1.6
Research and development expenditure

Research expenditure is written off against profits in the year in which it is incurred. Identifiable development expenditure is capitalised to the extent that the technical, commercial and financial feasibility can be demonstrated.

1.7
Intangible fixed assets other than goodwill

Intangible assets acquired separately from a business are recognised at cost and are subsequently measured at cost less accumulated amortisation and accumulated impairment losses.

 

Intangible assets acquired on business combinations are recognised separately from goodwill at the acquisition date where it is probable that the expected future economic benefits that are attributable to the asset will flow to the entity and the fair value of the asset can be measured reliably; the intangible asset arises from contractual or other legal rights; and the intangible asset is separable from the entity.

Amortisation is recognised so as to write off the cost or valuation of assets less their residual values over their useful lives on the following bases:

Patents & licences
5 years straight line
Development costs
5 years straight line
1.8
Tangible fixed assets

Tangible fixed assets are initially measured at cost and subsequently measured at cost or valuation, net of depreciation and any impairment losses.

Depreciation is recognised so as to write off the cost or valuation of assets less their residual values over their useful lives on the following bases:

Leasehold land and buildings
10 years straight line
Fixtures and fittings
5 - 10 years straight line
Computers
3 - 5 years straight line
Outpost VFX Limited
Notes to the group financial statements (continued)
For the year ended 31 March 2023
1
Accounting policies (continued)
21

The gain or loss arising on the disposal of an asset is determined as the difference between the sale proceeds and the carrying value of the asset, and is recognised in the income statement.

1.9
Fixed asset investments

Equity investments are measured at fair value through profit or loss, except for those equity investments that are not publicly traded and whose fair value cannot otherwise be measured reliably, which are recognised at cost less impairment until a reliable measure of fair value becomes available.

 

In the parent company financial statements, investments in subsidiaries, associates and jointly controlled entities are initially measured at cost and subsequently measured at cost less any accumulated impairment losses.

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

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

 

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

 

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

 

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

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

1.10
Impairment of fixed assets

At each reporting period end date, the group reviews the carrying amounts of its tangible and intangible assets to determine whether there is any indication that those assets have suffered an impairment loss. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment loss (if any). Where it is not possible to estimate the recoverable amount of an individual asset, the company estimates the recoverable amount of the cash-generating unit to which the asset belongs.

 

The carrying amount of the investments accounted for using the equity method is tested for impairment as a single asset. Any goodwill included in the carrying amount of the investment is not tested separately for impairment.

Outpost VFX Limited
Notes to the group financial statements (continued)
For the year ended 31 March 2023
1
Accounting policies (continued)
22

Recoverable amount is the higher of fair value less costs to sell and value in use. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset for which the estimates of future cash flows have not been adjusted.

 

If the recoverable amount of an asset (or cash-generating unit) is estimated to be less than its carrying amount, the carrying amount of the asset (or cash-generating unit) is reduced to its recoverable amount. An impairment loss is recognised immediately in profit or loss, unless the relevant asset is carried at a revalued amount, in which case the impairment loss is treated as a revaluation decrease.

Recognised impairment losses are reversed if, and only if, the reasons for the impairment loss have ceased to apply. Where an impairment loss subsequently reverses, the carrying amount of the asset (or cash-generating unit) is increased to the revised estimate of its recoverable amount, but so that the increased carrying amount does not exceed the carrying amount that would have been determined had no impairment loss been recognised for the asset (or cash-generating unit) in prior years. A reversal of an impairment loss is recognised immediately in profit or loss, unless the relevant asset is carried at a revalued amount, in which case the reversal of the impairment loss is treated as a revaluation increase.

1.11
Cash and cash equivalents

Cash and cash equivalents are basic financial assets and include cash in hand, deposits held at call with banks, other short-term liquid investments with original maturities of three months or less, and bank overdrafts. Bank overdrafts are shown within borrowings in current liabilities.

1.12
Financial instruments

The group has elected to apply the provisions of Section 11 ‘Basic Financial Instruments’ and Section 12 ‘Other Financial Instruments Issues’ of FRS 102 to all of its financial instruments.

 

Financial instruments are recognised in the group's statement of financial position when the group becomes party to the contractual provisions of the instrument.

 

Financial assets and liabilities are offset and the net amounts presented in the financial statements when there is a legally enforceable right to set off the recognised amounts and there is an intention to settle on a net basis or to realise the asset and settle the liability simultaneously.

Basic financial assets

Basic financial assets, which include debtors, are initially measured at transaction price including transaction costs and are subsequently carried at amortised cost using the effective interest method unless the arrangement constitutes a financing transaction, where the transaction is measured at the present value of the future receipts discounted at a market rate of interest. Financial assets classified as receivable within one year are not amortised.

Other financial assets

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

Outpost VFX Limited
Notes to the group financial statements (continued)
For the year ended 31 March 2023
1
Accounting policies (continued)
23
Impairment of financial assets

Financial assets, other than those held at fair value through profit and loss, are assessed for indicators of impairment at each reporting end date.

 

Financial assets are impaired where there is objective evidence that, as a result of one or more events that occurred after the initial recognition of the financial asset, the estimated future cash flows have been affected. If an asset is impaired, the impairment loss is the difference between the carrying amount and the present value of the estimated cash flows discounted at the asset’s original effective interest rate. The impairment loss is recognised in profit or loss.

 

If there is a decrease in the impairment loss arising from an event occurring after the impairment was recognised, the impairment is reversed. The reversal is such that the current carrying amount does not exceed what the carrying amount would have been, had the impairment not previously been recognised. The impairment reversal is recognised in profit or loss.

Derecognition of financial assets

Financial assets are derecognised only when the contractual rights to the cash flows from the asset expire or are settled, or when the group transfers the financial asset and substantially all the risks and rewards of ownership to another entity, or if some significant risks and rewards of ownership are retained but control of the asset has transferred to another party that is able to sell the asset in its entirety to an unrelated third party.

Classification of financial liabilities

Financial liabilities and equity instruments are classified according to the substance of the contractual arrangements entered into. An equity instrument is any contract that evidences a residual interest in the assets of the group after deducting all of its liabilities.

Basic financial liabilities

Basic financial liabilities, including creditors, bank loans, loans from fellow group companies and preference shares that are classified as debt, are initially recognised at transaction price unless the arrangement constitutes a financing transaction, where the debt instrument is measured at the present value of the future payments discounted at a market rate of interest. Financial liabilities classified as payable within one year are not amortised.

 

Debt instruments are subsequently carried at amortised cost, using the effective interest rate method.

 

Trade creditors are obligations to pay for goods or services that have been acquired in the ordinary course of business from suppliers. Amounts payable are classified as current liabilities if payment is due within one year or less. If not, they are presented as non-current liabilities. Trade creditors are recognised initially at transaction price and subsequently measured at amortised cost using the effective interest method.

Other financial liabilities

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

 

Debt instruments may be designated as being measured at fair value through profit or loss to eliminate or reduce an accounting mismatch or if the instruments are measured and their performance evaluated on a fair value basis in accordance with a documented risk management or investment strategy.

Outpost VFX Limited
Notes to the group financial statements (continued)
For the year ended 31 March 2023
1
Accounting policies (continued)
24
Derecognition of financial liabilities

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

1.13
Equity instruments

Equity instruments issued by the group are recorded at the proceeds received, net of transaction costs. Dividends payable on equity instruments are recognised as liabilities once they are no longer at the discretion of the group.

1.14
Taxation

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

Current tax

The tax currently payable is based on taxable profit for the year. Taxable profit differs from net profit as reported in the income statement because it excludes items of income or expense that are taxable or deductible in other years and it further excludes items that are never taxable or deductible. The group’s liability for current tax is calculated using tax rates that have been enacted or substantively enacted by the reporting end date.

Deferred tax

Deferred tax liabilities are generally recognised for all timing differences and deferred tax assets are recognised to the extent that it is probable that they will be recovered against the reversal of deferred tax liabilities or other future taxable profits. Such assets and liabilities are not recognised if the timing difference arises from goodwill or from the initial recognition of other assets and liabilities in a transaction that affects neither the tax profit nor the accounting profit.

 

The carrying amount of deferred tax assets is reviewed at each reporting end date and reduced to the extent that it is no longer probable that sufficient taxable profits will be available to allow all or part of the asset to be recovered. Deferred tax is calculated at the tax rates that are expected to apply in the period when the liability is settled or the asset is realised. Where items recognised in other comprehensive income or equity are chargeable to or deductible for tax purposes, the resulting current or deferred tax expense or income is presented in the same component of comprehensive income or equity as the transaction or other event that resulted in the tax expense or income. Deferred tax assets and liabilities are offset when the company has a legally enforceable right to offset current tax assets and liabilities and the deferred tax assets and liabilities relate to taxes levied by the same tax authority.

1.15
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.

1.16
Retirement benefits

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

Outpost VFX Limited
Notes to the group financial statements (continued)
For the year ended 31 March 2023
1
Accounting policies (continued)
25
1.17
Leases

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

 

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

Rentals payable under operating leases, including any lease incentives received, are charged to profit or loss on a straight line basis over the term of the relevant lease except where another more systematic basis is more representative of the time pattern in which economic benefits from the leased asset are consumed.

1.18
Government grants

Government grants are recognised at the fair value of the asset received or receivable when there is reasonable assurance that the grant conditions will be met and the grants will be received.

 

A grant that specifies performance conditions is recognised in income when the performance conditions are met. Where a grant does not specify performance conditions it is recognised in income when the proceeds are received or receivable. A grant received before the recognition criteria are satisfied is recognised as a liability.

1.19
Foreign exchange

Transactions in currencies other than pounds sterling are recorded at the rates of exchange prevailing at the dates of the transactions. At each reporting end date, monetary assets and liabilities that are denominated in foreign currencies are retranslated at the rates prevailing on the reporting end date. Gains and losses arising on translation in the period are included in profit or loss.

Outpost VFX Limited
Notes to the group financial statements (continued)
For the year ended 31 March 2023
26
2
Critical accounting judgements and key sources of estimation uncertainty

In the application of the group’s accounting policies, the directors are required to make judgements, estimates and assumptions about the carrying amount of assets and liabilities that are not readily apparent from other sources. The estimates and associated assumptions are based on historical experience and other factors that are considered to be relevant. Actual results may differ from these estimates.

 

The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised where the revision affects only that period, or in the period of the revision and future periods where the revision affects both current and future periods.

Critical judgements

The following judgements (apart from those involving estimates) have had the most significant effect on amounts recognised in the financial statements.

Recognition of contract income

Determining when to recognise revenues under the percentage of completion method requires significant judgement in determining estimated costs to complete the work.

Intangible assets

Intangible assets are being amortised over their deemed useful life. This period has been determined via a review of the assets considering both historic and future factors. The directors believe the amortisation period applied appropriately reflects the estimated useful life of the asset.

3
Turnover and other revenue
2023
2022
£
£
Turnover analysed by class of business
Provision of services
40,251,966
19,077,908
2023
2022
£
£
Turnover analysed by geographical market
UK
13,076,779
6,976,894
Rest of the world
27,175,187
12,101,014
40,251,966
19,077,908
2023
2022
£
£
Other revenue
Interest income
3,182
3,762
Grants received
9,489
-
Outpost VFX Limited
Notes to the group financial statements (continued)
For the year ended 31 March 2023
27
4
Exceptional item
2023
2022
£
£
Expenditure
Exceptional - Restructuring costs
2,457,456
-
Exceptional - Impairment costs
1,126,351
-
3,583,807
-

In March 2023, the group announced its intention to streamline operations in the LA and Frontier Montreal. Whilst all sites remain operational, the group announced its intention to significantly restructure the respective business models including making some employee redundancies.

 

Where leasehold property contracts became onerous as a result of the restructuring, the group has provided for all costs, net of any anticipated income, to the end of the lease or the anticipated date of the disposal or sublease. This provision relates to office properties in LA and Montreal which were vacated in 2023 and are surplus to the group’s requirements. The provision is expected to be utilised over the life of the related leases to 2026 and 2024 respectively.

 

Impairment costs are detailed in note 12 and 15.

5
Operating loss
2023
2022
£
£
Operating loss for the year is stated after charging/(crediting):
Exchange losses
146,752
74,030
Government grants
(9,489)
-
Depreciation of owned tangible fixed assets
409,940
569,610
Impairment of owned tangible fixed assets
90,553
-
Profit on disposal of tangible fixed assets
(14,874)
-
Amortisation of intangible assets
108,919
249,608
Impairment of intangible assets
1,035,798
-
0
Operating lease charges
1,477,250
566,493
6
Auditor's remuneration
2023
2022
Fees payable to the company's auditor and associates:
£
£
For audit services
Audit of the financial statements of the group and company
36,000
30,000
Outpost VFX Limited
Notes to the group financial statements (continued)
For the year ended 31 March 2023
28
7
Employees

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

Group
Company
2023
2022
2023
2022
Number
Number
Number
Number
568
270
107
71

Their aggregate remuneration comprised:

Group
Company
2023
2022
2023
2022
£
£
£
£
Wages and salaries
25,108,974
11,560,498
7,063,055
4,035,839
Social security costs
2,410,474
1,241,055
776,233
460,707
Pension costs
123,819
70,254
123,819
70,254
27,643,267
12,871,807
7,963,107
4,566,800
8
Directors' remuneration
2023
2022
£
£
Remuneration for qualifying services
641,330
506,842
Company pension contributions to defined contribution schemes
4,592
-
645,922
506,842
Remuneration disclosed above includes the following amounts paid to the highest paid director:
2023
2022
£
£
Remuneration for qualifying services
278,756
243,000
Company pension contributions to defined contribution schemes
1,321
1,321
9
Interest receivable and similar income
2023
2022
£
£
Interest income
Other interest income
3,182
3,762
Outpost VFX Limited
Notes to the group financial statements (continued)
For the year ended 31 March 2023
29
10
Interest payable and similar expenses
2023
2022
£
£
Interest on financial liabilities measured at amortised cost:
Other interest on financial liabilities
247,874
75,707
Other finance costs:
Other interest
64,048
64,048
Total finance costs
311,922
139,755

Included within other interest are dividends for 7.5% preference share totalling £64,048 (2022: £64,048).

11
Taxation
2023
2022
£
£
Current tax
UK corporation tax on profits for the current period
-
0
(162,136)
Foreign current tax on profits for the current period
429,575
13,625
Total current tax
429,575
(148,511)
Deferred tax
Origination and reversal of timing differences
(27,823)
(3,268)
Total tax charge/(credit)
401,752
(151,779)

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

2023
2022
£
£
Loss before taxation
(4,459,747)
(406,438)
Expected tax credit based on the standard rate of corporation tax in the UK of 19.00% (2022: 19.00%)
(847,352)
(77,223)
Unutilised tax losses carried forward
847,352
77,223
Research and development tax credit
-
0
(162,136)
Effect of overseas tax rates
401,752
10,357
Taxation charge/(credit)
401,752
(151,779)
Outpost VFX Limited
Notes to the group financial statements (continued)
For the year ended 31 March 2023
30
12
Impairments

Impairment tests have been carried out where appropriate and the following impairment losses have been recognised in profit or loss:

2023
2022
Notes
£
£
In respect of:
Intangible assets
13
1,035,798
-
Property, plant and equipment
14
90,553
-
Recognised in:
Administrative expenses - Exceptional items
1,126,351
-

An impairment of £1,035,798 has been recorded for development costs relating to internal systems and software due to the projects no longer being part of the group’s strategy moving forward.

 

An impairment of £90,553 has been recorded for property plant and equipment. The assets have been written down to their estimated value-in-use.

13
Intangible fixed assets
Group
Patents & licences
Development costs
Total
£
£
£
Cost
At 1 April 2022
-
0
1,665,043
1,665,043
Additions - internally developed
-
0
8,632
8,632
Additions - separately acquired
57,627
-
0
57,627
Disposals
-
0
(1,432,977)
(1,432,977)
At 31 March 2023
57,627
240,698
298,325
Amortisation and impairment
At 1 April 2022
-
0
372,948
372,948
Amortisation charged for the year
4,802
104,117
108,919
Impairment losses
-
0
1,035,798
1,035,798
Disposals
-
0
(1,432,977)
(1,432,977)
At 31 March 2023
4,802
79,886
84,688
Carrying amount
At 31 March 2023
52,825
160,812
213,637
At 31 March 2022
-
0
1,292,095
1,292,095
Outpost VFX Limited
Notes to the group financial statements (continued)
For the year ended 31 March 2023
13
Intangible fixed assets (continued)
31
Company
Patents & licences
Development costs
Total
£
£
£
Cost
At 1 April 2022
-
0
1,665,043
1,665,043
Additions
57,627
-
0
57,627
Disposals
-
0
(1,432,977)
(1,432,977)
At 31 March 2023
57,627
232,066
289,693
Amortisation and impairment
At 1 April 2022
-
0
372,948
372,948
Amortisation charged for the year
4,802
103,879
108,681
Impairment losses
-
0
1,035,798
1,035,798
Disposals
-
0
(1,432,977)
(1,432,977)
At 31 March 2023
4,802
79,648
84,450
Carrying amount
At 31 March 2023
52,825
152,418
205,243
At 31 March 2022
-
0
1,292,095
1,292,095

More information on impairment movements in the year is given in note 12.

Outpost VFX Limited
Notes to the group financial statements (continued)
For the year ended 31 March 2023
32
14
Tangible fixed assets
Group
Leasehold land and buildings
Fixtures and fittings
Computers
Total
£
£
£
£
Cost
At 1 April 2022
112,838
350,414
2,671,292
3,134,544
Additions
417,009
162,357
314,390
893,756
Disposals
(112,838)
(148,553)
(2,268,448)
(2,529,839)
At 31 March 2023
417,009
364,218
717,234
1,498,461
Depreciation and impairment
At 1 April 2022
73,016
159,168
2,225,169
2,457,353
Depreciation charged in the year
20,017
72,604
317,319
409,940
Impairment losses
18,255
30,189
42,109
90,553
Eliminated in respect of disposals
(106,669)
(148,553)
(2,268,448)
(2,523,670)
At 31 March 2023
4,619
113,408
316,149
434,176
Carrying amount
At 31 March 2023
412,390
250,810
401,085
1,064,285
At 31 March 2022
39,822
191,246
446,123
677,191
Company
Leasehold land and buildings
Fixtures and fittings
Computers
Total
£
£
£
£
Cost
At 1 April 2022
78,107
206,023
1,839,207
2,123,337
Additions
316,875
130,683
131,857
579,415
Disposals
(78,107)
(147,765)
(1,627,584)
(1,853,456)
At 31 March 2023
316,875
188,941
343,480
849,296
Depreciation and impairment
At 1 April 2022
52,042
123,023
1,622,692
1,797,757
Depreciation charged in the year
7,810
38,123
149,658
195,591
Impairment losses
18,255
30,189
42,109
90,553
Eliminated in respect of disposals
(78,107)
(147,765)
(1,627,584)
(1,853,456)
At 31 March 2023
-
0
43,570
186,875
230,445
Carrying amount
At 31 March 2023
316,875
145,371
156,605
618,851
At 31 March 2022
26,065
83,000
216,515
325,580
Outpost VFX Limited
Notes to the group financial statements (continued)
For the year ended 31 March 2023
14
Tangible fixed assets (continued)
33

More information on impairment movements in the year is given in note 12.

15
Fixed asset investments
Group
Company
2023
2022
2023
2022
Notes
£
£
£
£
Investments in subsidiaries
16
-
0
-
0
160,620
423,007
Movements in fixed asset investments
Company
Shares in subsidiaries
£
Cost or valuation
At 1 April 2022 and 31 March 2023
423,007
Impairment
At 1 April 2022
-
Impairment losses
262,387
At 31 March 2023
262,387
Carrying amount
At 31 March 2023
160,620
At 31 March 2022
423,007

The group’s subsidiaries, Outpost VFX (Montreal) Limited and Outpost VFX (LA) Limited, have suffered adverse results as a result of changes in their underlying business models and the associated production platforms being serviced. As a result there has been a decline in the recoverable amount of the cash-generating unit.  The recoverable amount was determined using the current net asset position and future cash flow projections.

16
Subsidiaries

Details of the company's subsidiaries at 31 March 2023 are as follows:

Name of undertaking
Registered office
Class of
% Held
shares held
Direct
Outpost VFX Inc
USA
Ordinary
100.00
Outpost VFX Inc
Canada
Ordinary
100.00
Outpost VFX Mumbai
India
Ordinary
100.00
Outpost VFX Asia Pte Ltd
Singapore
Ordinary
100.00
Frontier VFX Inc
Canada
Ordinary
100.00
Outpost VFX Limited
Notes to the group financial statements (continued)
For the year ended 31 March 2023
34
17
Debtors
Group
Company
2023
2022
2023
2022
Amounts falling due within one year:
£
£
£
£
Trade debtors
2,594,783
1,284,283
976,470
346,018
Corporation tax recoverable
444,447
216,494
217,539
216,494
Amounts owed by group undertakings
-
-
1,433,965
1,914,647
Other debtors
969,246
443,770
568,281
222,408
Prepayments and accrued income
3,391,864
2,592,831
2,072,420
1,148,950
7,400,340
4,537,378
5,268,675
3,848,517
Amounts falling due after more than one year:
Deferred tax asset (note 22)
186,322
288,204
155,545
284,936
Total debtors
7,586,662
4,825,582
5,424,220
4,133,453
18
Creditors: amounts falling due within one year
Group
Company
2023
2022
2023
2022
Notes
£
£
£
£
Obligations under finance leases
21
173,297
133,112
129,503
117,511
Other borrowings
20
227,064
301,038
227,064
233,810
Trade creditors
1,303,266
1,452,707
824,226
873,472
Amounts owed to group undertakings
-
0
-
0
-
0
792,898
Corporation tax payable
423,685
13,625
-
0
-
0
Other taxation and social security
1,528,189
978,069
909,705
661,421
Deferred income
3,165,848
1,102,023
528,563
-
0
Other creditors
2,529,052
186,867
161,228
18,806
Accruals and deferred income
3,132,957
514,071
1,617,972
300,643
12,483,358
4,681,512
4,398,261
2,998,561

Included in accruals were amounts of £1,914,916 relating to onerous leases, where leasehold properties become vacant, the group provides for all costs, net of anticipated income, to the end of the lease or the anticipated date of the disposal or sublease. This provision relates to office properties in LA and Montreal which were vacated in 2023 and are surplus to the group’s requirements. The provision is expected to be utilised over the life of the related leases to 2026 and 2024 respectively.

 

In March 2023, the group announced its intention to streamline operations in the LA and Frontier Montreal and to make employees redundant. An accrual has been recognised for redundancies communicated and implemented following the year end as part of the above restructure amounting to £542,540.

 

Outpost VFX Limited
Notes to the group financial statements (continued)
For the year ended 31 March 2023
35
19
Creditors: amounts falling due after more than one year
Group
Company
2023
2022
2023
2022
Notes
£
£
£
£
Obligations under finance leases
21
105,950
125,300
54,533
106,022
Other borrowings
20
3,110,893
1,208,593
2,847,512
945,273
Accruals and deferred income
240,848
-
0
240,848
-
0
3,457,691
1,333,893
3,142,893
1,051,295
20
Loans and overdrafts
Group
Company
Note
2023
2022
2023
2022
£
£
£
£
Preference shares
25
426,990
426,990
426,990
426,990
Other loans
30
2,910,967
1,082,641
2,647,586
752,093
3,337,957
1,509,631
3,074,576
1,179,083
Payable within one year
227,064
301,038
227,064
233,810
Payable after one year
3,110,893
1,208,593
2,847,512
945,273
Included in other loans are the following:
Group
Company
2023
2022
2023
2022
£
£
£
£
Payable in 60 monthly instalments commencing June 2021 and carries interest at a rate of 3.99% per annum over the Bank of England base rate and is secured on the postponment of a related party loan.
475,000
625,000
475,000
625,000
Payable in 25 monthly instalments and carries interest at 8%.
84,304
-
84,304
-
Payable in 60 monthly instalments commencing May 2018 and carries interest at 19.9% on the principal.
2,756
32,532
2,756
32,532
Payable in 60 monthly instalments commencing March 2022 and carries interest at 0%.
263,381
330,548
-
-
Payable in 81 monthly instalments commencing April 2017 and carries interest at a rate of 6.68% over the Bank of England base rate and is secured on the groups assets.
40,526
94,561
40,526
94,561
Outpost VFX Limited
Notes to the group financial statements (continued)
For the year ended 31 March 2023
20
Loans and overdrafts (continued)
36
Convertible loan notes bearing interest at 3% per annum. Repayable on any of the following: a listing or admission to trading of the Copmany's shares on an investment, change of control of Copmany's share capital, meaning the transfer of at least 51% of the Company's voting shares, a sale of substantially all of the copmany's business.
2,000,000
-
2,000,000
-
Interest accrued on the convertible loan notes and repayable at the same time as principal.
45,000
-
45,000
-
2,910,967
1,082,641
2,647,586
752,093

In August 2022 the company raised additional equity funding from its existing investors as described in Note 31. As part of this funding the investors made an additional £2Million available through Convertible Loan Notes. These loan notes are fully drawn down and the funds are held on an imprest deposit by the company. The loan notes initially and from draw down to 31 March 2023 bore interest at 3% per annum. There is no fixed repayment date, but the loans and accumulated interest will become repayable on any of the following: a listing or admission to trading of the Company's shares on an investment, change of control of Company's share capital, meaning the transfer of at least 51% of the Company's voting shares; a sale of substantially all of the Company's business.

If the loan note funds are utilised, then any amount by which the imprest deposit falls below £2M for a period of 90 days or more becomes convertible at the request of the Loan Note holders into ordinary shares in the company.

As of February 2024 no draw down from the imprest account had taken place and the company continues to manage its cash balances to preclude this. Pursuant to a further fundraising in February 2024 the interest rate on these loan notes was adjusted to 9% and the conversion triggers were suspended until February 2025.

The company has therefore determined that these items should be presented entirely as debt, with no equity component.

21
Finance lease obligations
Group
Company
2023
2022
2023
2022
£
£
£
£
Future minimum lease payments due under finance leases:
Within one year
173,297
133,112
129,503
117,511
In two to five years
105,950
125,300
54,533
106,022
279,247
258,412
184,036
223,533

Finance lease payments represent rentals payable by the company or group for certain items of plant and machinery. Leases include purchase options at the end of the lease period, and no restrictions are placed on the use of the assets.

Outpost VFX Limited
Notes to the group financial statements (continued)
For the year ended 31 March 2023
37
22
Deferred taxation

The following are the major deferred tax liabilities and assets recognised by the group and company, and movements thereon:

Liabilities
Liabilities
Assets
Assets
2023
2022
2023
2022
Group
£
£
£
£
Accelerated capital allowances
155,545
284,936
-
-
Tax losses
-
-
186,322
288,204
155,545
284,936
186,322
288,204
Liabilities
Liabilities
Assets
Assets
2023
2022
2023
2022
Company
£
£
£
£
Accelerated capital allowances
155,545
284,936
-
-
Tax losses
-
-
155,545
284,936
155,545
284,936
155,545
284,936
Group
Company
2023
2023
Movements in the year:
£
£
Asset at 1 April 2022
(3,268)
-
Credit to profit or loss
(27,509)
-
Asset at 31 March 2023
(30,777)
-

The deferred tax asset set out above is expected relates to the utilization of tax losses against future expected profits of the future periods. The total value of losses carried forward was £5,464,719 (2022: £2,256,498).

23
Retirement benefit schemes
2023
2022
Defined contribution schemes
£
£
Charge to profit or loss in respect of defined contribution schemes
123,819
70,254

A defined contribution pension scheme is operated for all qualifying employees. The assets of the scheme are held separately from those of the group in an independently administered fund.

Outpost VFX Limited
Notes to the group financial statements (continued)
For the year ended 31 March 2023
38
24
Share-based payment transactions

The company operates an Enterprise Management Incentive share option plan. Ordinary share options can be exercised when exercise conditions are met, which is the vesting date. The share options would not ordinarily be exercisable earlier than the occurrence of any of the following: a listing or admission to trading of the Company's shares on an investment, change of control of Company's share capital, meaning the transfer of at least 51% of the Company's voting shares; a sale of substantially all of the Company's business.

 

The Ordinary shares carry rights to vote, they can be considered for dividends, and have the right to a share in capital on the sale of the business/shares.

 

Group & Company
Number of share options
Weighted average exercise price
2023
2022
2023
2022
Number
Number
£
£
Outstanding at 1 April 2022
2,170,365
-
-
-
Granted
-
2,170,365
0.06
0.06
Outstanding at 31 March 2023
2,170,365
2,170,365
-
-
Exercisable at 31 March 2023
-
-
-
-

 

The options outstanding at 31 March 2023 had an exercise price of £0.061 and a remaining contractual life of 8 years.

 

The fair value of the options was calculated using an estimated market value of the group.

 

25
Share capital
Group and company
2023
2022
2023
2022
Ordinary share capital
Number
Number
£
£
Issued and fully paid
Ordinary shares of 0.001p each
17,964,868
18,805,256
180
188
D Ordinary shares of 0.001p each
610,082
610,082
6
6
E Ordinary shares of 0.001p each
190
-
-
-
Preferred A Ordinary shares of 0.001p each
11,887,559
7,168,459
119
72
Preferred B Ordinary shares of 0.001p each
1,194,744
1,194,744
12
12
Preferred C Ordinary shares of 0.001p each
498,977
305,041
5
3
32,156,420
28,083,582
322
281
Outpost VFX Limited
Notes to the group financial statements (continued)
For the year ended 31 March 2023
25
Share capital (continued)
39
2023
2022
2023
2022
Preference share capital
Number
Number
£
£
Issued and fully paid
Preference shares of 0.001p each
853,979
853,979
8
8
853,979
853,979
8
8
Preference shares classified as equity
4
4
Preference shares classified as liabilities
4
4
8
8
Total equity share capital
326
285

Ordinary shares carry voting rights and rights to dividends.
Preference shares do not carry voting rights and has rights to dividends.
D Ordinary shares carry voting rights and rights to dividends.
Preferred A Ordinary shares carry voting rights and rights to dividends.
Preferred B Ordinary shares carry voting rights and rights to dividends.
Preferred C Ordinary shares carry voting rights and rights to dividends.
E Ordinary shares do not carry voting rights and have no rights to dividends.

The Preference shares carry a 7.5% fixed cumulative preferential dividend at the rate of 7.5% per annum, payable upon a share sale or listing. The shares are redeemable at issuer’s discretion. On a winding-up, the holders will receive repayment of capital plus any arrears of dividend ranking after Preferred A Ordinary, Preferred B Ordinary and Preferred C Ordinary shares and return. The holders have no voting rights.

The preference shares were deemed to contain both an equity and liability element with a value of £426,990 held in other borrowings (Note 18 and 20).The company believes that despite being redeemable at the issuer’s discretion, redemption is unlikely to occur until any of the following: a listing or admission to trading of the Company's shares on an investment, change of control of Company's share capital, meaning the transfer of at least 51% of the Company's voting shares; a sale of substantially all of the Company's business. Any such redemption would be subjugated to available funds being applied first to the Preferred A, B and C Ordinary shares.

Outpost VFX Limited
Notes to the group financial statements (continued)
For the year ended 31 March 2023
40
26
Operating lease commitments
Lessee

At the reporting end date the group had outstanding commitments for future minimum lease payments under non-cancellable operating leases, which fall due as follows:

Group
Company
2023
2022
2023
2022
£
£
£
£
Within one year
593,647
390,157
144,113
151,735
Between two and five years
1,698,643
2,031,884
110,971
255,084
In over five years
950,685
1,141,197
-
-
3,242,975
3,563,238
255,084
406,819
27
Related party transactions
Remuneration of key management personnel

The remuneration of key management personnel is as follows.

2023
2022
£
£
Aggregate compensation
785,909
565,011

The company has taken advantage of the exemption available in section 1AC.35 of FRS102 from the requirement to disclose transactions with group companies on the grounds that the company is the parent of a wholly owned subsidiary within the group.

 

 

28
Directors' transactions

Loans have been granted by the group to its directors as follows:

Description
% Rate
Opening balance
Interest charged
Closing balance
£
£
£
Director's loan
2.00
190,292
3,806
194,098
190,292
3,806
194,098
Outpost VFX Limited
Notes to the group financial statements (continued)
For the year ended 31 March 2023
41
29
Cash generated from/(absorbed by) group operations
2023
2022
£
£
Loss for the year after tax
(4,861,499)
(254,659)
Adjustments for:
Taxation charged/(credited)
401,752
(151,779)
Finance costs
311,922
139,755
Investment income
(3,182)
(3,762)
Gain on disposal of tangible fixed assets
(14,874)
-
Amortisation and impairment of intangible assets
1,144,717
249,608
Depreciation and impairment of tangible fixed assets
500,493
569,610
Foreign exchange gains on cash equivalents
(229,808)
(68,856)
Movements in working capital:
Increase in debtors
(2,638,815)
(3,056,590)
Increase in creditors
5,602,598
2,389,294
Increase in deferred income
2,063,825
-
Cash generated from/(absorbed by) operations
2,277,129
(187,379)
30
Analysis of changes in net funds/(debt) - group
1 April 2022
Cash flows
New finance leases
Exchange rate movements
31 March 2023
£
£
£
£
£
Cash at bank and in hand
395,863
5,760,427
-
389,230
6,545,520
Borrowings excluding overdrafts
(1,509,631)
(1,828,326)
-
-
(3,337,957)
Obligations under finance leases
(258,412)
23,225
(44,060)
-
(279,247)
(1,372,180)
3,955,326
(44,060)
389,230
2,928,316
Outpost VFX Limited
Notes to the group financial statements (continued)
For the year ended 31 March 2023
42
31
Fundraising transactions during the year

Share capital as described in note 25 increased during the year as a result of a transaction with investors in August 2022 which resulted with a cash injection in the form of both Equity and Convertible Loan Notes (see note 20) after fees of £5,355,005.

 

Share capital
Share premium
Long term debt
Total
£
£
£
£
Issue of preferred A shares
41
3,499,960
-
3,500,001
Issue of convertible loan notes
-
-
2,000,000
2,000,000
Costs offset against share premium
-
(144,996)
-
(144,996)
Total
41
3,354,964
2,000,000
5,355,005
32
Subsequent events

Following a period of constrained trading during the October 2023 to January 2024 as demand reduced as a result of industrial action in the US TV and Film Production industry the company’s investors have made further funding available to provide additional working capital reserves during a period of recovery.

In February 2024 a new class of Preferred A1 shares was issued, with 100,000 shares at a nominal value of £1 and a Share Premium after estimated fees of £2,410,000. The paid up value is £2,500,000.

 

The New Preferred A1 Shares do not carry voting rights and have no rights to dividends. They are redeemable at a premium of 100% of paid up value on the occurrence of any of the following: a listing or admission to trading of the Company's shares on an investment, change of control of Company's share capital, meaning the transfer of at least 51% of the Company's voting shares; a sale of substantially all of the Company's business. Distributions to all other classes of share capital would be subjugated to available funds being applied first to the Preferred A1 shares.

 

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