Company Registration No. 14434923 (England and Wales)
Hail Leo UK Productions Limited
Annual report and financial statements
for the period ended 31 December 2023
Hail Leo UK Productions Limited
Contents
Page
Company information
1
Directors' report
1
Directors' responsibilities statement
2
Independent auditor's report
3 - 6
Statement of comprehensive Income
7
Balance Sheet
8
Statement of changes in equity
9
Notes to the financial statements
10 - 15
Hail Leo UK Productions Limited
Company information
Directors
David Clapham
(Appointed 15 February 2024)
Ajay Patel
(Appointed 5 August 2024)
Secretary
David Clapham
(Appointed 15 February 2024)
Ajay Patel
(Appointed 5 August 2024)
Company number
14434923
Registered office
71 Queen Victoria Street
London
EC4V 4BE
Independent auditor
Saffery LLP
71 Queen Victoria Street
London
EC4V 4BE
Hail Leo UK Productions Limited
Directors' report
For the period ended 31 December 2023
1
The directors of Hail Leo UK Productions Limited ("the Company") present the annual report containing their Director's Report and the financial statements for the period ended 31 December 2023. In accordance with section 414B of the Companies Act 2006, the directors have taken advantage of the exemption from preparing a Strategic Report.
Directors
The directors who held office during the period and up to the date of signature of the financial statements were as follows:
Lesley Freeman
(Appointed 21 October 2022 and resigned 5 August 2024)
David Clapham
(Appointed 15 February 2024)
Ajay Patel
(Appointed 5 August 2024)
No director held any interest in the share capital of the Company during the period.
Principal activities
The company was incorporated on 21 October 2022 and began trading on the same day. The principal activity of the company is that of motion picture production.
Results and dividends
The directors do not recommend payment of any dividend.
Qualifying third party indemnity provisions
Qualifying third party indemnity provisions are in place to indemnify the directors and officers of the Company.
Auditor
Saffery 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.
Disclosure of information to the auditor
The directors who held office at the date of approval of this annual report confirm that so far as they are aware, there is no relevant audit information of which the Company’s auditor is unaware, and the directors have taken steps that ought to have been taken as directors to make themselves aware of any relevant audit information and to establish that the Company’s auditor is aware of that information.
Small companies exemption
This report has been prepared in accordance with the provisions applicable to companies entitled to the small companies exemption.
On behalf of the board
David Clapham
Director
15 October 2024
Hail Leo UK Productions Limited
Directors' responsibilities statement
For the period ended 31 December 2023
2
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 Financial Reporting Standard 102 ‘The Financial Reporting Standard applicable in the UK and Republic of Ireland’ and applicable law. Under company law, the directors must not approve the financial statements unless they are satisfied that they give a true and fair view of the state of affairs of the Company and of the profit or loss of the Company for that period. In preparing those financial statements, the directors are required to:
select suitable accounting policies in accordance with Section 10 of FRS 102 and then apply them consistently;
make judgements and accounting estimates that are reasonable and prudent;
present information, including accounting policies, in a manner that provides relevant, reliable, comparable and understandable information;
provide additional disclosures when compliance with the specific requirements in FRS 102 is insufficient to enable users to understand the impact of particular transactions, other events and conditions on the Company’s financial position and financial performance;
in respect of the financial statements, state whether FRS 102 has been followed, subject to any material departures disclosed and explained in the financial statements; and
prepare the financial statements on the going concern basis unless it is appropriate to presume that the Company will not continue in business.
The directors are responsible for keeping adequate accounting records that are sufficient to show and explain the Company’s transactions and disclose with reasonable accuracy at any time the financial position of the Company and to enable them to ensure that the financial statements comply with the Companies Act 2006. They are also responsible for safeguarding the assets of the Company and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.
Under applicable law and regulations, the directors are also responsible for preparing a director’s report that complies with that law and those regulations. The directors are responsible for the maintenance and integrity of the corporate and financial information included on the Company's website.
Hail Leo UK Productions Limited
Independent auditor's report
To the members of Hail Leo UK Productions Limited
3
Opinion
We have audited the financial statements of Hail Leo UK Productions Limited (the 'company') for the period ended 31 December 2023 which comprise the income statement, the statement of financial position, the statement of changes in equity and notes to the financial statements, including significant accounting policies. The financial reporting framework that has been applied in their preparation is applicable law and United Kingdom Accounting Standards, including 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 the financial statements:
give a true and fair view of the state of the company's affairs as at 31 December 2023 and of its profit for the period then ended;
have been properly prepared in accordance with United Kingdom Generally Accepted Accounting Practice; and
have been prepared in accordance with the requirements of the Companies Act 2006.
We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and applicable law. Our responsibilities under those standards are further described in the Auditor's responsibilities for the audit of the financial statements section of our report. We are independent of the company in accordance with the ethical requirements that are relevant to our audit of the financial statements in the UK, including the FRC’s Ethical Standard, and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
Conclusions relating to going concern
In auditing the financial statements, we have concluded that the directors' use of the going concern basis of accounting in the preparation of the financial statements is appropriate.
Based on the work we have performed, we have not identified any material uncertainties relating to events or conditions that, individually or collectively, may cast significant doubt on the company's ability to continue as a going concern for a period of at least twelve months from when the financial statements are authorised for issue.
Our responsibilities and the responsibilities of the directors with respect to going concern are described in the relevant sections of this report.
The other information comprises the information included in the annual report other than the financial statements and our auditor's report thereon. The directors are responsible for the other information contained within the annual report. Our opinion on the financial statements does not cover the other information and, except to the extent otherwise explicitly stated in our report, we do not express any form of assurance conclusion thereon.
Our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the course of the audit, or otherwise appears to be materially misstated. If we identify such material inconsistencies or apparent material misstatements, we are required to determine whether this gives rise to a material misstatement in the financial statements themselves. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact.
We have nothing to report in this regard.
Hail Leo UK Productions Limited
Independent auditor's report (continued)
To the members of Hail Leo UK Productions Limited
4
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 directors' report for the financial period for which the financial statements are prepared is consistent with the financial statements; and
the directors' report has been prepared in accordance with applicable legal requirements.
Matters on which we are required to report by exception
In the light of the knowledge and understanding of the company and its environment obtained in the course of the audit, we have not identified material misstatements in the directors' report.
We have nothing to report in respect of the following matters in relation to which the Companies Act 2006 requires us to report to you if, in our opinion:
adequate accounting records have not been kept, or returns adequate for our audit have not been received from branches not visited by us; or
the financial statements are not in agreement with the accounting records and returns; or
certain disclosures of remuneration specified by law are not made; or
we have not received all the information and explanations we require for our audit; or
the directors were not entitled to prepare the financial statements in accordance with the small companies regime and take advantage of the small companies' exemption in preparing the directors' report and from the requirement to prepare a strategic report.
Responsibilities of directors
As explained more fully in the directors' responsibilities statement set out on page 2, the directors are responsible for the preparation of the financial statements and for being satisfied that they give a true and fair view, and for such internal control as the directors determine is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error. In preparing the financial statements, the directors are responsible for assessing the company's ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the directors either intend to liquidate the company or to cease operations, or have no realistic alternative but to do so.
Auditor's responsibilities for the audit of the financial statements
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor's report that includes our opinion. Reasonable assurance is a high level of assurance but is not a guarantee that an audit conducted in accordance with ISAs (UK) will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements.
Hail Leo UK Productions Limited
Independent auditor's report (continued)
To the members of Hail Leo UK Productions Limited
5
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 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 company by discussions with directors and by updating our understanding of the sector in which the company operates.
Laws and regulations of direct significance in the context of the company include The Companies Act 2006 and UK Tax legislation, specifically legislation relating to creative industry tax credits.
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 financial statement disclosures. We reviewed the 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 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.
This report is made solely to the company's members, as a body, in accordance with Chapter 3 of Part 16 of the Companies Act 2006. Our audit work has been undertaken so that we might state to the company's members those matters we are required to state to them in an auditor's report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the company and the company's members as a body, for our audit work, for this report, or for the opinions we have formed.
Hail Leo UK Productions Limited
Independent auditor's report (continued)
To the members of Hail Leo UK Productions Limited
6
Nigel Walde
Senior Statutory Auditor
For and on behalf of Saffery LLP
16 October 2024
Chartered Accountants
Statutory Auditors
71 Queen Victoria Street
London
EC4V 4BE
Hail Leo UK Productions Limited
Statement of comprehensive income
For the period ended 31 December 2023
7
Period
ended
31 December
2023
Notes
£
Turnover
3
8,339,567
Cost of sales
(9,776,441)
Gross loss
(1,436,874)
Administrative expenses
(16,500)
Operating loss before taxation
(1,453,374)
Tax on loss
7
1,455,086
Profit and Total Comprehensive Income for the Period
1,712
Hail Leo UK Productions Limited
Balance sheet
As at 31 December 2023
8
2023
Notes
£
Current assets
Debtors: amounts falling due within one year
8
2,336,428
Cash at bank and in hand
1,263,674
3,600,102
Creditors: amounts falling due within one year
9
(3,598,389)
Net current assets
1,713
Capital and reserves
Called up share capital
10
1
Retained earnings
1,712
Total equity
1,713
The financial statements were approved by the board of directors and authorised for issue on 15 October 2024 and are signed on its behalf by:
David Clapham
Director
Company Registration No. 14434923
Hail Leo UK Productions Limited
Statement of changes in equity
For the period ended 31 December 2023
9
Share capital
Retained earnings
Total
£
£
£
Balance at 21 October 2022
-
Period ended 31 December 2023:
Profit and total comprehensive income for the period
-
1,712
1,712
Issue of share capital
10
1
-
1
Balance at 31 December 2023
1
1,712
1,713
Hail Leo UK Productions Limited
Notes to the financial statements
For the period ended 31 December 2023
10
1
Accounting policies
Statement of compliance
Hail Leo UK Productions Limited ("the Company") is a private company limited by shares incorporated in England and Wales. The registered office is 71 Queen Victoria Street, London, EC4V 4BE.
The Company's financial statements have been prepared in compliance with Financial Reporting Standard 102 'The Financial Reporting Standard applicable in the UK and Republic of Ireland' ("FRS 102"), and with the Companies Act 2006.
1.1
Reporting period
These accounts are prepared for the 14 month period from 21 October 2022 to 31 December 2023, in order to align with the reporting dates of the wider group.
1.2
Basis of preparation
These financial statements have been prepared in accordance with applicable accounting standards and under the historical cost convention.
The functional currency of the Company's operations in the United Kingdom is pound sterling. The financial statements are presented in pound sterling and are rounded to the nearest pound sterling (£).
The Company has taken advantage of the following disclosure exemptions in FRS 102:
The requirements of Section 7 Statement of Cash Flows and Section 3 Financial Statement Presentation paragraph 3.17(d)
The requirements of Section 33 Related Party Disclosures paragraph 33.1A and 33.7
The requirements of Section 11 Basic Financial Instruments paragraph 11.39 to 11.48A
The exemptions stated above are available to the Company as it is a member of a group where the parent of that group prepares publicly available consolidated financial statements.
Pronouncements recently adopted
In July 2023, the Financial Reporting Council issued amendments to Financial Reporting Standard 102 "The Financial Reporting Standard applicable in the UK and Republic of Ireland" International tax reform - Pillar two model rules (the "Amendments"). The Amendments provide a mandatory temporary exception to accounting for deferred taxes arising from the implementation of the Pillar Two model rules; and disclosure requirements for affected entities to help users of the financial statements better understand an entity's exposure to Pillar Two income taxes arising from that legislation. The Directors adopted the Amendments on 1 January 2023 with no material impact to the financial statements.
On 11 July 2023, the UK enacted new global minimum tax rules to align with the Organization for Economic Co-operation and Development Base Erosion and Profit Shifting (“BEPS”) Pillar Two model rules. The enacted law includes the implementation of the multinational top-up tax (“MTUT”) and domestic minimum top-up tax (“DTT”). The MTUT and DTT are effective for fiscal years beginning on or after 31 December 2023. The Company has applied the mandatory exception provided under Section 29 – Income Taxes to neither recognize nor disclose information on deferred tax assets and liabilities related to Pillar Two income taxes. The Directors are in the process of assessing the impacts of the global minimum tax rules enacted by the UK on the Company and its application to our ultimate parent entity. While the UK has enacted the MTUT and DTT as part of the Finance (No.2) Act 2023 legislation, additional guidance must be provided to enable affected parties to reasonably estimate top-up taxes. As of the period ended 31 December 2023, the Directors are still evaluating the impact of the global minimum tax rules enacted by the UK Government.
Hail Leo UK Productions Limited
Notes to the financial statements (continued)
For the period ended 31 December 2023
1
Accounting policies (continued)
11
1.3
Going concern
During the period ended 31 December 2023, the Company's operations generated a profit after tax and the Company is in a net asset position and is expected to continue to be, through the Company’s principaltrue activity of the provision of motion picture production. The Company is dependent on, and contributes to, the continued success of the Amazon.com Inc. group. The directors have concluded that the Amazon.com Inc. group, based on its reported results, has sufficient financial resources to support the Company either by providing financial and operational services to support its activities, or by continuing its investment in the Company’s operations, but only to the extent that the Company is not otherwise able. The directors have a reasonable expectation that the Company has adequate resources to continue as an operational business for the foreseeable future, being twelve months from the approval of the financial statements (until the end of October 2025). This period is deemed appropriate due to the nature of the principal activities of the business and Amazon.com Inc.’s ongoing commitment and proven ability to support the Company’s operations. The financial statements have therefore been prepared on a going concern basis.
The principal accounting policies applied in the preparation of the financial statements are set out below.
1.4
Turnover
Turnover represents income from the Company's principal trading activities and is stated exclusive of VAT.
In respect of long-term contracts for on-going services, turnover represents the value of work done in the period, including estimates of amounts not invoiced. Value of work done in respect of long-term contracts and contracts for on-going services is determines by reference to the stage of completion.
The "percentage of completion method" is used to determine the appropriate amount to recognise in a given period. The stage of completion is measured by the proportion of contract costs incurred for work performed to date compared to the estimated total contract costs. Costs incurred in the period in connection with future activity on a contract are excluded from contract costs in determining the stage of completion. These costs are presented as stocks, prepayments, or other assets depending on their nature, and provided it is probable they will be recoverable.
1.5
Cash at bank and in hand
All highly liquid instruments with an original maturity of three months or less are classified as cash equivalents.
1.6
Taxation
The tax expense represents the sum of the tax currently recoverable.
Current tax
The tax currently recoverable is based on relievable losses arising in the period as the result of film tax relief legislation. Relievable losses differ from net losses as reported in the income statement because they include an additional deduction relating to qualifying film development expenditure and exclude items of income or expense that are taxable or deductible in other years, as well as items that are never taxable or deductible. The Company's tax position is calculated using tax rates that have been enacted or substantively enacted by the reporting end date.
1.7
Foreign exchange
Transactions in currencies other than pounds sterling are recorded at the rates of exchange prevailing at the dates of the transactions where practicable, else at the average rate over the period in which the transactions were incurred. 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.
Hail Leo UK Productions Limited
Notes to the financial statements (continued)
For the period ended 31 December 2023
12
2
Critical accounting judgements and key sources of estimation uncertainty
In the application of the company’s accounting policies, the directors are required to make judgements, estimates and assumptions about the carrying amount of assets and liabilities that are not readily apparent from other sources. The estimates and associated assumptions are based on historical experience and other factors that are considered to be relevant. Actual results may differ from these estimates.
The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised where the revision affects only that period, or in the period of the revision and future periods where the revision affects both current and future periods.
Key sources of estimation uncertainty
The estimates and assumptions which have a significant risk of causing a material adjustment to the carrying amount of assets and liabilities are as follows.
Tax credit estimate
The directors believes the key accounting estimate within the financial statements for the Company is the valuation of the film tax credit available. The estimate is based on the assessment of the value of qualifying expenditure as per HMRC legislations and guidance plus assessment of the qualification of the underlying production as eligible for the tax relief.
In the opinion of the directors, there were no other critical judgements or other estimation uncertainties in these financial statements.
3
Turnover
2023
£
Turnover analysed by class of business
Sale of film rights
8,337,855
Production services fee
1,712
8,339,567
2023
£
Turnover analysed by geographical market
United States of America
8,339,567
4
Operating loss
2023
Operating loss for the period is stated after charging:
£
Fees payable to the Company's auditor for the audit of the Company's financial statements
11,500
Fees payable to the Company's auditor for non-audit services
5,000
16,500
Hail Leo UK Productions Limited
Notes to the financial statements (continued)
For the period ended 31 December 2023
13
5
Employees
The average monthly number of persons (excluding directors) employed by the Company during the period was 3.
6
Directors' remuneration
The director's remuneration has been borne by the parent company, Amazon.com, Inc. or one of its affiliated companies. The directors do not believe that it is practicable to apportion their remuneration for qualifying services to the Company for the period ended 31 December 2023.
7
Taxation
2023
£
Current tax
UK corporation tax on loss for the current period
(1,455,086)
The actual credit for the period can be reconciled to the expected credit for the period based on the profit or loss and the standard rate of tax as follows:
2023
£
Loss before taxation
(1,453,374)
Expected tax credit based on the standard rate of corporation tax in the UK of 22.78%
(331,079)
Enhanced losses arising from the film tax credit
(1,427,682)
Difference between the rate of corporation tax and the rate of relief under the film tax credit
(129,206)
Losses carried forward
432,881
Taxation credit for the period
(1,455,086)
The Finance Act 2021, which received Royal Assent on 10 June 2021, enacted a 6% increase in the UK corporation tax rate from 19% to 25% for the year beginning 1 April 2023. The corporation tax rate for the period ended 31 December 2023 is therefore a blended rate of 22.78%. Any deferred tax assets and liabilities are reflected according to the applicable corporation tax rate expected to apply at the time of realisation.
As at 31 December 2023, there were no recognised deferred tax assets or liabilities.
Hail Leo UK Productions Limited
Notes to the financial statements (continued)
For the period ended 31 December 2023
14
8
Debtors
2023
Amounts falling due within one year:
£
Corporation tax receivable
1,455,086
Amounts owed by group undertakings
212,025
Other debtors
669,317
2,336,428
9
Creditors: amounts falling due within one year
2023
£
Trade creditors
419,399
Amounts owed to group undertakings
2,963,626
Accruals and deferred income
215,364
3,598,389
10
Share capital
2023
2023
Ordinary share capital
Number
£
Issued and fully paid
Ordinary share of £1 each
1
1
11
Operating lease commitments
At the reporting end date the company had outstanding commitments for future minimum lease payments under non-cancellable operating leases, as follows:
2023
£
Within one year
4,873,351
The above commitments fall under an arrangement with a group company and have been provided at a rate below the market rate.
Hail Leo UK Productions Limited
Notes to the financial statements (continued)
For the period ended 31 December 2023
15
12
Ultimate controlling party
The Company's immediate parent undertaking is Metro-Goldwyn-Mayer Studios Inc., a company incorporated in the United States of America. The address of this company is 245 N Beverly Drive, Beverly Hills, CA 90210-5317, USA.
The smallest and largest group in which the results of the Company are consolidated is that headed by its ultimate parent undertaking Amazon.com, Inc., a company incorporated in the United States of America. Copies of group financial statements of Amazon.com, Inc. can be obtained from 410 Terry Avenue N, Seattle, WA 98109-5210, USA.
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