The directors present the strategic report and financial statements for the year ended 31 December 2023.
During 2023 the Company rebranded to become the Molinare Creative Group. Building on over 50 years of experience, providing creative excellence to the film, TV, games, and commercial communities.
As part of our strategy, we acquired Notorious DIT to support our growth plans and build on seamless workflow from onset DIT, lab, dailies grading and 4K screening through transcoding for editorial and dailies review and VFX pulls to automated services including SAN and LTO archiving.
The Molinare Creative Group is now home to Notorious DIT, Molinare TV & Film, Voice, Sound Warriors and Pip Studios. Together, we provide an end-to-end solution to our clients, including dailies and DIT services, offline services, full creative post production, QC, mastering, foley, sound design, field records, casting, ADR, voice over, performance capture and localisation.
2023 presented significant challenges due to the actors and writers strike in the U.S. along with a general commissioning slowdown in the UK. By August, financial performance was substantially below expectations, leading the directors to the difficult decision of implementing redundancies.
Boasting a multi award-winning team of creatives, the sharpest minds in technology and an unparalleled team of producers, we bring filmmakers stories to life. With state of the art facilities in Central London, Bedfordshire and Reading, we strive to constantly stay on the cutting edge of technology, collaborating with fellow disruptors to enable the creatives to stay creative.
As an employer, Molinare is proud to highlight a remarkable achievement: our recognition as a Broadcast Best Place to Work. Securing this award during such a turbulent period is a testament to the resilience and dedication of our staff. This recognition serves as a powerful reminder of the strength of our workplace community and the importance of maintaining a supportive and inclusive environment, even in the face of adversity.
The Directors consider the key risks and uncertainties to be:
The demand for content slowed towards the end of the pandemic and was further hit by the actor’s and writer’s strike in the US. Whilst there are signs of a recovery, the risks of future global headwinds remain, as they would in any industry.
The competitive landscape is continually changing following the boom and slow down and Molinare invests a lot into maintaining a technological and creative advantage.
The continued development of Molinare Creative Group. This will give us the platform to support an end-to-end media business across all genres, from DIT and Dailies services, Offline Editorial, Finishing Post, QC/Deliverables into full Localisation Services. Over the next 12-months the develop of cutting-edge technology and implementation of Ai and machine learning to improve efficiencies and workflow to streamline process.
The financial performance of the Company began strongly in 2023 and remained EBITDA positive until Q4. As the year progressed, the industry faced significant challenges due to the Actors and Writers strike and general commissioning slowdown in the UK. Molinare’s diverse offering and acquisition of Notorious DIT helped maintain some resilience, but revenues finished £0.8m down vs 2022. This slowdown, combined with £0.6m of increases in property and utility costs, resulted in Molinare ending the year with an EBITDA loss of £0.5m.
In 2023, the Company also incurred financial costs to execute a series of debt-to-equity conversions which has resulted in £15,335,687 of other loans being capitalised. Together with a share issue, which resulted in a capital injection of £1,000,000, the Company had net assets of £3,970,754 as at 31 December 2023 which is a significant improvement compared to prior years (2022: £9,838,706 net liabilities).
Continue striving for excellence in the customer and staff experience to develop long lasting partnerships that deliver excellence through offline, finishing post production and interactive services.
Driving improved cross selling between the group to drive organic growth within the organisation and across new regions and client sectors.
Improving efficiencies and effectiveness of production workflows across the group.
The group manages its operating and financial performances using several Key Performance Indicators. The most important of which, for the year ended 31 December 2023, are as follows:
| 2023 | 2022 |
Turnover (£’000) | £16,106 | £16,858 |
Gross Margin | 50.3% | 55.1% |
Operating Turnover/Employee (£’000) | 103 | 95 |
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 current year comprise consolidated results and are therefore not entirely comparable with those of the prior year, which consist solely of those for the Company.
The directors who held office during the year and up to the date of signature of the financial statements were as follows:
The results for the year are set out on page 10.
The current year comprises of consolidated results, as a result of an acquisition in the year. Prior to this, the Company was not part of a group, therefore the prior year results are that of the Company only.
No ordinary or preference dividends were paid. The directors do not recommend payment of a final dividend.
In accordance with the company's articles, a resolution proposing that Moore Kingston Smith LLP be reappointed as auditor of the group will be put at a General Meeting.
We have audited the financial statements of Molinare TV & Film Limited (‘the parent company’) and its subsidiary for the year ended 31 December 2023 which comprise the Group Statement of Comprehensive Income, the Group Balance Sheet, the Company Balance Sheet, 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 FRS 102 ‘The Financial Reporting Standard Applicable in the UK and Ireland’ (United Kingdom Generally Accepted Accounting Practice).
Basis for opinion
We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and applicable law. Our responsibilities under those standards are further described in the Auditor'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 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 group's and parent 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
The other information comprises the information included in the annual report other than the financial statements and our auditor's report thereon. The directors are responsible for the other information contained within the annual report. Our opinion on the financial statements does not cover the other information and, except to the extent otherwise explicitly stated in our report, we do not express any form of assurance conclusion thereon.
Our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the course of the audit, or otherwise appears to be materially misstated. If we identify such material inconsistencies or apparent material misstatements, we are required to determine whether this gives rise to a material misstatement in the financial statements themselves. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact.
We have nothing to report in this regard.
Opinions on other matters prescribed by the Companies Act 2006
In our opinion, based on the work undertaken in the course of our audit:
the information given in the Strategic Report and the Directors' Report for the financial year for which the financial statements are prepared is consistent with the financial statements; and
the Strategic Report and the Directors' Report have been prepared in accordance with applicable legal requirements.
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:
adequate accounting records have not been kept by the parent company, or returns adequate for our audit have not been received from branches not visited by us; or
the parent company financial statements are not in agreement with the accounting records and returns; or
certain disclosures of directors' remuneration specified by law are not made; or
we have not received all the information and explanations we require for our audit.
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's and 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 parent 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 aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements.
As part of an audit in accordance with ISAs (UK) we exercise professional judgement and maintain professional scepticism throughout the audit. We also:
Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.
Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purposes of expressing an opinion on the effectiveness of the company’s internal control.
Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by the directors.
Conclude on the appropriateness of the directors’ use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the group's or the parent company’s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor’s report to the related disclosures in the financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor’s report. However, future events or conditions may cause the group or the parent company to cease to continue as a going concern.
Evaluate the overall presentation, structure and content of the financial statements, including the disclosures, and whether the financial statements represent the underlying transactions and events in a manner that achieves fair presentation.
Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business activities within the group to express an opinion on the consolidated financial statements. We are responsible for the direction, supervision and performance of the group audit. We remain solely responsible for our audit opinion.
We communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit.
Explanation as to what extent the audit was considered capable of detecting irregularities, including
fraud
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.
The objectives of our audit in respect of fraud, are; to identify and assess the risks of material misstatement of the financial statements due to fraud; to obtain sufficient appropriate audit evidence regarding the assessed risks of material misstatement due to fraud, through designing and implementing appropriate responses to those assessed risks; and to respond appropriately to instances of fraud or suspected fraud identified during the audit. However, the primary responsibility for the prevention and detection of fraud rests with both management and those charged with governance of the company.
Our approach was as follows:
We obtained an understanding of the legal and regulatory requirements applicable to the company and considered that the most significant are the Companies Act 2006, UK financial reporting standards as issued by the Financial Reporting Council, and UK taxation legislation.
We obtained an understanding of how the company complies with these requirements by discussions with management and those charged with governance.
We assessed the risk of material misstatement of the financial statements, including the risk of material misstatement due to fraud and how it might occur, by holding discussions with management and those charged with governance.
We inquired of management and those charged with governance as to any known instances of noncompliance or suspected non-compliance with laws and regulations.
Based on this understanding, we designed specific appropriate audit procedures to identify instances of non-compliance with laws and regulations. This included making enquiries of management and those charged with governance and obtaining additional corroborative evidence as required.
There are inherent limitations in the audit procedures described above. We are less likely to become aware of instances of non-compliance with laws and regulations that are not closely related to events and transactions reflected in the financial statements. 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.
Use of our report
This report is made solely to the company’s members, as a body, in accordance with Chapter 3 of Part 16 of the Companies Act 2006. Our audit work has been undertaken for no purpose other than to draw to the attention of the company’s members those matters we are required to include in an auditor's report addressed to them. To the fullest extent permitted by law, we do not accept or assume responsibility to any party 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.
The Consolidated Statement of Comprehensive Income has been prepared on the basis that all operations are continuing operations.
As permitted by s408 Companies Act 2006, the Company has not presented its own profit and loss account and related notes. The Company made a loss in the year of £2,647,229 (2022 - £582,973).
Molinare TV & Film Limited (“the Company”) is a limited company domiciled and incorporated in England and Wales. The registered office is 34 Fouberts Place, London, W1F 7PX.
The Group consists of Molinare TV & Film Limited and its subsidiary company, Notorious DIT Limited.
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.
The financial statements have been prepared under the historical cost convention. The principal accounting policies adopted are set out below.
The 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 for parent company information presented within the consolidated financial statements:
Section 7 ‘Statement of Cash Flows’: Presentation of a statement of cash flow and related notes and disclosures.
The consolidated financial statements incorporate those of Molinare TV & Film Limited and all of its subsidiaries (ie entities that the group controls through its power to govern the financial and operating policies so as to obtain economic benefits). Subsidiaries acquired during the year are consolidated using the purchase method. Their results are incorporated from the date that control passes.
The group has made a loss of £2,600,216 (2022: £582,973) in the year and had net assets of £3,897,767 (2022: £9,838,706 net liabilities) and cash reserves of £942,188 at 31 December 2023 (2022: £1,114,719).
The company has made a loss of £2,527,229 (2022: £582,973) in the year and had net assets of £3,970,754 (2022: £9,838,706 net liabilities) and cash reserves of £938,949 at 31 December 2023 (2022: £1,114,719).
During the financial year, £15,336,687 of other loans were capitalised as part of a series of debt-to-equity conversions and there was a £1,000,000 capital injection arising from a share issue. Furthermore, the company secured an additional credit facility of £1,000,000 in May 2024 of which £500,000 has since been drawn down.
The directors have prepared projections and cash flow forecasts for a period of 12 months from the date of approval of these financial statements which indicate that, the company will continue to trade and generate cash from trading in 2024 and 2025. The directors continue to monitor the business performance, and in the event income is impacted significantly they will consider cost cutting measures in order to ensure the long term viability of the business.
Consequently, the directors are confident that between the existing financing facilities and the current cash generated from operations the company will have sufficient funds to continue to meet its liabilities as they fall due for at least 12 months from the date of approval of the financial statements and therefore have prepared the financial statements on a going concern basis.
Turnover is recognised at the fair value of the consideration received or receivable for 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.
When cash inflows are deferred and represent a financing arrangement, the fair value of the consideration is the present value of the future receipts. The difference between the fair value of the consideration and the nominal amount received is recognised as interest income.
Revenue is recognised as contract activity progresses, so that for incomplete contracts, it reflects the partial performance of the contractual obligations. For such contracts, the amount of revenue recognised in the profit and loss account is calculated by reference to the value of work performed.
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 profit and loss account.
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.
Entities in which the group has a long term interest and shares control under a contractual arrangement are classified as jointly controlled entities.
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.
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 balance sheet 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, 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, 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.
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.
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, 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 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.
Financial liabilities are derecognised when the group's contractual obligations expire or are discharged or cancelled.
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.
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.
Payments to defined contribution retirement benefit schemes are charged as an expense as they fall due.
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 balance sheet 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.
Rental income from operating leases is recognised on a straight line basis over the term of the relevant lease. Initial direct costs incurred in negotiating and arranging an operating lease are added to the carrying amount of the leased asset and recognised on a straight line basis over the lease term.
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.
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.
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.
The following judgements (apart from those involving estimates) have had the most significant effect on amounts recognised in the financial statements.
The annual amortisation charge for intangible assets is sensitive to changes in the estimated lives and residual values of the assets.
The annual depreciation charge for property, plant and equipment is sensitive to changes in the estimated useful economic lives and residual values of the assets. The useful economic lives and residual values are re-assessed annually. They are amended when necessary to reflect current estimates, based on technological advancement, future investments, economic utilisation and the physical condition of the assets. See note 12 for the carrying amount of the tangible fixed assets and the accounting policies for the useful economic lives for each class of asset.
The company makes an estimate of the recoverable value of trade and other debtors. When assessing impairment of trade and other debtors, management considers factors including the current credit rating of the debtor, the ageing profile of debtors and historical experience. See note 15 for the net carrying amount of the debtors and associated impairment provision.
Revenue from contracts is assessed on an individual basis with revenue earned being ascertained based on the stage of completion of the contract which is estimated using a combination of the milestones in the contract and the time spent to date compared to the total time expected to be required to undertake the contract. Estimates of the total time required to undertake the contracts are made on a regular basis and subject to management review. These estimates may differ from the actual results due to a variety of factors such as efficiency of working, accuracy of assessment of progress to date and client decision making.
The Company has advanced £181k in loans to its subsidiary. These loans are unsecured, interest-free, and repayable on demand. The Company has assessed the recoverability of these loans at the balance sheet date and considers them to be fully recoverable based on the future trading potential of the subsidiary.
Management has deemed no impairments to the investments and goodwill necessary, due to their being no significant changes in the business environment or value of the assets purchased. The group are benefiting from the added Brand value and the synergies of working together.
The useful economic life of goodwill is based a number of factors including competitive environment, technological advances and intellectual property, customer perception and loyalty and many other factors that were all considered when investing in the subsidiary. The useful economic lives and residual values are re-assessed annually. Goodwill impairment reviews are also performed annually. See note 11 for the carrying amount of the goodwill and 1.6 for the useful economic life of goodwill.
An analysis of the group's turnover is as follows:
The average monthly number of persons (including directors) employed by the group and company during the year was:
Their aggregate remuneration comprised:
The number of directors for whom retirement benefits are accruing under defined contribution schemes amounted to 1 (2022: 1).
There is only one director remunerated through the company and therefore the highest paid director information is disclosed above.
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:
The net carrying value of tangible fixed assets includes the following in respect of assets held under finance leases or hire purchase contracts.
Details of the company's subsidiaries at 31 December 2023 are as follows:
Registered office:
1: Unit 12 Brockley Cross Business Centre 96 Endwell Road, London, SE4 2PD
On 2 October 2023 the group acquired 100 percent of the issued capital of Notorious DIT Limited.
There are £12.2m (2022: £10.5m) of losses carried forward upon which there is no deferred tax asset recognised.
Included within bank loans and overdrafts is a loan from a third party debt provider,
Included within other loans are amounts totalling £nil (2022: £4,252,625) due in respect of financing activities for which a fixed and floating charge were given over the tangible fixed assets of the Company. The shareholder loans included within other loans were secured and accrue interest at rates between 10% and 15% per annum.
In September 2023, £11,613,115 of other loans were converted to Ordinary shares. See note 23 for further details.
The liability component is measured at amortised cost, and the difference between the carrying amount of the liability at the date of issue and the amount reported in the Balance Sheet represents the effective interest rate less interest paid to that date.
The convertible loan notes were converted to equity in the year. See note 23 for further information.
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. The average lease term is 3 years. All leases are on a fixed repayment basis and no arrangements have been entered into for contingent rental payments.
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.
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:
Next Wave Partners 1C LP are shareholders of the Company. Next Wave Partners LLP acts as a manager of this entity. R Mackenzie is a member of Next Wave Partners LLP. Next Wave Partners LLP charged a fee of £44,260(2022: £20,021) for the services of directors for the year.
At the year end, the company owed Next Wave Partners 1C LP £nil (2022: £7,217,625). £2,000,000 of the funding was in the form of a convertible loan, the equity element of this loan was calculated to be £747,375. Up to September 2023, interest of £332,187 (2022: £498,500) was accrued on the loans and £2,945,461 of interest was converted along with the principal loan into Ordinary shares.
Saphir Capital Investment Fund SA SICAV-SIF were shareholders of the Company in the year. Saphir Capital Partners UK Limited, a subsidiary of Saphir Capital Partner SA, act as a manager of this entity. D Polunina is a member of Saphir Capital Partners UK Limited. Saphir Capital Private Equity Fund charged a fee of £nil (2022: £20,000) for the services of directors for the year. At the balance sheet date £nil (2022: £120,000) was outstanding and included in trade creditors.
During the year, interest of £125,667 (2022: £188,500) was accrued on the loans. In September the principal loan of £2,965,000 and accrued interest to date of £1,057,068 was transferred to Next Wave Partners 1C LP. Shortly after the transfer of the loan to Next Wave Partners 1C LP, this amount was then converted into Ordinary shares.
At the year-end the company was owed £69,665 (2022: £105,125) by Pip Studios Limited, a related party by virtue of common control, having received £25,850 (2022: £19,440) of services in the year.
During the year, purchases of £67,172 (2022: £nil) were made from N J Gathard and Sons, a company controlled by a close family member of a key management personnel.
No guarantees have been given or received by the Company.
Post year end, the company received a further £1,000,000 unsecured credit facility from one of its shareholders. Interest will be charged on amounts drawn down at 7% per annum. As at the date of signing, £500,000 of this facility had been drawn down.
Post year end, the denomination of the shares Ordinary shares changed from £0.01 to £10.