The directors present the strategic report for the year ended 31 December 2023.
The directors are pleased with the progress achieved by our group of companies in 2023; in continuing to create the true home of live events and entertainment technology in the UK.
Our environment
2023 marked the first full year of trading of our completed second generation campus in Wakefield, West Yorkshire as well as a number of market firsts for our education, services and innovation divisions. Our market has continued to benefit from the strong growth of live events and a cultural tailwind for exceptional collective entertainment experiences, whilst film production was negatively impacted by the SAG-AFTRA strikes over the second half of 2023 and into 2024. Despite this, the group has been able to deliver very strong results underpinning the growth of our activities and services, inline with our Second Decade Plan. We have strengthened our commitment to reach true carbon neutrality by 2030; by creating our first studio facility powered by onsite renewable power generation, as well as by acquiring ISO 9001 and 14001 approvals during the year. Through the development of our education offering at the Academy of Live Technology and our cutting edge innovation research work at XPLOR, Production Park remains at the forefront of providing people and processes to support the incredible live experiences of tomorrow.
Our team
Production Park is built on the creative talent, adaptability and energy of our people. We believe in supporting artists, sponsors, productions and practitioners to realise their absolute best results; by removing barriers and supporting their endeavors. This requires a dynamic and determined approach and demands that we look after our team, respecting their work and their personal selves in equal measure. Investment in our people has continued in 2023 with the group headcount passing a milestone of 100 valued team members. We annually review remuneration and benefit packages and have been able to provide pay increases in line with the increased cost of living. Equally, we have been able to deliver 14 internal promotions in the year whilst also securing a number of senior appointments to strengthen the group leadership team. Finally we continued to deliver a commitment to being a great place to work through our free lunches, diversified educational opportunities and speaker events.
Our passion
Over 2023 Production Park has hosted in excess of 100 productions ranging from theatre shows to expansive global stadium tours. We have continued to develop our campus, opening CentreStage as an onsite social hub, café and bar, as well as expanding our premium band rehearsal capabilities through Unit2. 2023 has also been an important year in establishing Production Park as a credible partner for film making. Our 2022 partnership with Blitz Hire Limited has driven both underlying growth and improved our network and customer understanding for larger film requirements. This has been effective in supporting us to play a role in a number of major film productions in 2023 and, at the time of writing, we have secured internationally sponsored film production on site in 2024.
Our performance
2023 provided a marker year for the investment and diversification strategy that has been led by our directors over the past 5 years. The group exceeded plan expectations with a turnover up more than 60% on prior year at £24.67m and an EBITDA of £7.76m for the period. This performance was delivered despite the strike environment, which the BFI estimated reduced UK film production activity by 40% across the year. In achieving this result the group continued its relentless commitment to supporting our customers through growth of equipment and facilities, adding more that £5m of fixed assets in the year and agreeing land acquisitions to allow the continued expansion of the campus.
Our community
The nurturing of future talent has been a core priority of Production Park over the last decade, epitomised by the continual investment in the Academy for Live Technology (ALT). ALT, since its founding in 2011, has seen more than 1,000 students graduate directly into the entertainment technology industry, many of whom are now notable in their field as production managers, designers and systems engineers. This award winning institution has received continued support and investment from Production Park and today continues to evolve and professionalise whilst remaining focused on providing real skills; learnt hands on within industry environments. In 2023 we continued our pledge to our local community by hosting over 400 learners for free, across transitional and sponsored courses, thereby widening access and participation opportunities within the live events sector.
The directors approve expenditure on a daily basis and various reports are produced on a regular basis to monitor the performance of the group. Management accounts are produced promptly each month and circulated to all board members. The board considers cash flow and balances on both a weekly and monthly basis. The target of the board is to improve the financial position of the group compared to the previous year and to maintain a significant level of net assets.
The directors consider turnover, gross profit margin, profit before tax and net assets to be key performance indicators. The directors are satisfied with the performance and position of the group based upon these metrics at the year end.
The directors consider client retention and client satisfaction key performance indicators.
On behalf of the board
The directors present their annual report and financial statements for the year ended 31 December 2023.
The results for the year are set out on page 8.
No ordinary dividends were paid. The directors do not recommend payment of a final dividend.
The directors who held office during the year and up to the date of signature of the financial statements were as follows:
BHP LLP were appointed as auditor to the company and in accordance with section 485 of the Companies Act 2006, a resolution proposing that they be re-appointed will be put at a General Meeting.
This report has been prepared in accordance with the provisions applicable to companies entitled to the medium-sized companies exemption.
Basis for opinion
Material uncertainty relating to going concern
In auditing the financial statements, we have concluded that the directors' use of the going concern basis of accounting in the preparation of the financial statements is appropriate.
Based on the work we have performed, we have not identified any material uncertainties relating to events or conditions that, individually or collectively, may cast significant doubt on the company's ability to continue as a going concern for a period of at least twelve months from when the financial statements are authorised for issue.
Our responsibilities and the responsibilities of the directors with respect to going concern are described in the relevant sections of this report.
Other information
Opinions on other matters prescribed by the Companies Act 2006
In our opinion, based on the work undertaken in the course of our audit:
the information given in the strategic report and the directors' report for the financial year for which the financial statements are prepared is consistent with the financial statements; and
the strategic report and the directors' report have been prepared in accordance with applicable legal requirements.
As explained more fully in the directors' responsibilities statement, the directors are responsible for the preparation of the financial statements and for being satisfied that they give a true and fair view, and for such internal control as the directors determine is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error. In preparing the financial statements, the directors are responsible for assessing the company's ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the directors either intend to liquidate the company or to cease operations, or have no realistic alternative but to do so.
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor's report that includes our opinion. Reasonable assurance is a high level of assurance but is not a guarantee that an audit conducted in accordance with ISAs (UK) will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements.
Irregularities, including fraud, are instances of non-compliance with laws and regulations. We design procedures in line with our responsibilities, outlined above, to detect material misstatements in respect of irregularities, including fraud. The extent to which our procedures are capable of detecting irregularities, including fraud, is detailed below.
We gained an understanding of the legal and regulatory framework applicable to the company and the industry in which it operates and considered the risk of acts by the company that were contrary to applicable laws and regulations, including fraud. We designed audit procedures to respond to the risk, recognising that the risk of not detecting a material misstatement due to fraud is higher than the risk of not detecting one resulting from error, as fraud may involve deliberate concealment by, for example, forgery or intentional misrepresentations, or through collusion.
We focused on laws and regulations, relevant to the company, which could give rise to a material misstatement in the financial statements. Our tests included agreeing the financial statement disclosures to underlying supporting documentation and enquiries with management. There are inherent limitations in the audit procedures described 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.
As part of our audit, we addressed the risk of management override of internal controls, including testing of journals and review of nominal ledger. We evaluated whether there was evidence of bias by the directors that represented a risk of material misstatement due to fraud.
A further description of our responsibilities is available on the Financial Reporting Council’s website at: https://www.frc.org.uk/auditorsresponsibilities. This description forms part of our auditor's report.
Use of our report
This report is made solely to the company's member 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 member those matters we are required to state to the member 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 member, for our audit work, for this report, or for the opinions we have formed.
The profit and loss account has been prepared on the basis that all operations are continuing operations.
Sit Down Limited is a private company limited by shares incorporated in England and Wales. The registered office is Unit 53 Lidgate Crescent, Langthwaite Business Park, South Kirkby, Pontefract, West Yorkshire, WF9 3NR.
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 £.
This company is a qualifying entity for the purposes of FRS 102, being a member of a group where the parent of that group prepares publicly available consolidated financial statements, including this company, which are intended to give a true and fair view of the assets, liabilities, financial position and profit or loss of the group. The company has therefore taken advantage of exemptions from the following disclosure requirements:
Section 7 ‘Statement of Cash Flows’: Presentation of a statement of cash flow and related notes and disclosures;
Section 11 ‘Basic Financial Instruments’ and Section 12 ‘Other Financial Instrument Issues’: Interest income/expense and net gains/losses for each category of financial instrument; basis of determining fair values; details of collateral, loan defaults or breaches, details of hedges, hedging fair value changes recognised in profit or loss and in other comprehensive income;
Section 26 ‘Share based Payment’: Share-based payment expense charged to profit or loss, reconciliation of opening and closing number and weighted average exercise price of share options, how the fair value of options granted was measured, measurement and carrying amount of liabilities for cash-settled share-based payments, explanation of modifications to arrangements;
Section 33 ‘Related Party Disclosures’: Compensation for key management personnel.
The financial statements of the company are consolidated in the financial statements of Production Park Holdings Limited. These consolidated financial statements are available from its registered office, Unit 53 Lidgate Crescent, South Kirkby, Pontefract, England, WF9 3NR.
Basic financial assets, which include debtors and cash and bank balances, are initially measured at transaction price including transaction costs and are subsequently carried at amortised cost using the effective interest method unless the arrangement constitutes a financing transaction, where the transaction is measured at the present value of the future receipts discounted at a market rate of interest. Financial assets classified as receivable within one year are not amortised.
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.
Financial assets are derecognised only when the contractual rights to the cash flows from the asset expire or are settled, or when the company transfers the financial asset and substantially all the risks and rewards of ownership to another entity, or if some significant risks and rewards of ownership are retained but control of the asset has transferred to another party that is able to sell the asset in its entirety to an unrelated third party.
Financial liabilities and equity instruments are classified according to the substance of the contractual arrangements entered into. An equity instrument is any contract that evidences a residual interest in the assets of the company after deducting all of its liabilities.
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.
Derivatives, including interest rate swaps and forward foreign exchange contracts, are not basic financial instruments. Derivatives are initially recognised at fair value on the date a derivative contract is entered into and are subsequently re-measured at their fair value. Changes in the fair value of derivatives are recognised in profit or loss in finance costs or finance income as appropriate, unless hedge accounting is applied and the hedge is a cash flow hedge.
Debt instruments that do not meet the conditions in FRS 102 paragraph 11.9 are subsequently measured at fair value through profit or loss. Debt instruments may be designated as being measured at fair value through profit or loss to eliminate or reduce an accounting mismatch or if the instruments are measured and their performance evaluated on a fair value basis in accordance with a documented risk management or investment strategy.
Financial liabilities are derecognised when the company’s contractual obligations expire or are discharged or cancelled.
Equity instruments issued by the company are recorded at the proceeds received, net of transaction costs. Dividends payable on equity instruments are recognised as liabilities once they are no longer at the discretion of the company.
In the application of the company’s accounting policies, the directors are required to make judgements, estimates and assumptions about the carrying amount of assets and liabilities that are not readily apparent from other sources. The estimates and associated assumptions are based on historical experience and other factors that are considered to be relevant. Actual results may differ from these estimates.
The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised where the revision affects only that period, or in the period of the revision and future periods where the revision affects both current and future periods.
The following judgements (apart from those involving estimates) have had the most significant effect on amounts recognised in the financial statements.
In assessing whether there have been any indicators of impairment of assets, the directors have considered both external and internal sources of information such as market conditions, counterparty credit ratings and experience of recoverability and where applicable, the ability of the asset to be operated as planned.
The average monthly number of persons (including directors) employed by the company during the year was:
The actual charge 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:
Details of the company's subsidiaries at 31 December 2023 are as follows:
Bank loans are secured against present and future debts, moneys and other liabilities owed by group companies.