Company registration number SC152259 (Scotland)
CANONGATE BOOKS LIMITED
ANNUAL REPORT AND FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2024
CANONGATE BOOKS LIMITED
COMPANY INFORMATION
Directors
Mr. F Bickmore
Mr. J Byng
Ms. J Fry
Ms. K Gibb
Ms. C Gorham
Mrs. A Ollard
Mr. D Olusoga
Mr. D Young (Chair)
Secretary
Ms. K Gibb
Company number
SC152259
Registered office
14 High Street
Edinburgh
United Kingdom
EH1 1TE
Auditor
Azets Audit Services
Quay 2
139 Fountainbridge
Edinburgh
EH3 9QG
Solicitors
Wright, Johnston & Mackenzie LLP
12/13 St Andrew Square
Edinburgh
United Kingdom
EH2 2AF
CANONGATE BOOKS LIMITED
CONTENTS
Page
Strategic report
1 - 3
Directors' report
4 - 6
Independent auditor's report
7 - 9
Statement of comprehensive income
10
Balance sheet
11
Statement of changes in equity
12
Statement of cash flows
13
Notes to the financial statements
14 - 24
CANONGATE BOOKS LIMITED
STRATEGIC REPORT
FOR THE YEAR ENDED 31 MARCH 2024
- 1 -
The directors present the strategic report for the year ended 31 March 2024.
Review of the business
Canongate continues to thrive as an independent publishing house headquartered in Edinburgh, with a further office in West London. The company remains committed to vital and innovative publishing, both fiction and non-fiction, and from a diverse range of writers, while its imprint Severn House specialises in genre fiction including mysteries, thrillers, crime, science fiction, horror and romance.
In May 2024 we realised a landmark achievement when we were officially certified as a B Corporation. The journey to B Corp status began in 2021 and involved people from across the whole company. Our goal is that all our work and our decision making should honour our principles as a company and be in the best interests not just of profit but of all stakeholders, shareholders, employees, customers and suppliers. More broadly, Canongate’s work should benefit society as a whole and the environment. B Corp status shows how far we’ve come in achieving this, but it’s an ongoing journey as we continue to improve and hold ourselves to account.
Canongate’s top sellers in this financial year included Tan Twan Eng’s The House of Doors, longlisted for the 2023 Booker Prize; Award-winning poet Lemn Sissay’s Let the Light Pour In; A History of Women in 101 Objects by Annabelle Hirsch, translated by Eleanor Updegraff; Len Pennie's Poyums and paperbacks of recent hardback best sellers Alan Rickman’s Madly Deeply; Faith, Hope and Carnage by Nick Cave and Sean O’Hagan and brother.do.you.love me.by Manni Coe and Reuben Coe.
Our imprint Severn House had success with Calico by Lee Goldberg; Davis Bunn’s The Rowan, The Borgia Portrait by David Hewson and Simon Brett’s Mrs Pargeter’s Patio.
Canongate’s business continues to flourish with growth evidenced in our corelist and international sales and international rights-selling.
We remain committed to providing a safe, flexible and accommodating working environment for our staff, and aim to both employ and retain staff who reflect the diverse nature of the books we publish and the audiences who read them. The directors recognise the value of our staff and continue to review benefits, remuneration, support and development opportunities. A bi-annual survey is conducted and feedback is also received from our staff groups.
CANONGATE BOOKS LIMITED
STRATEGIC REPORT (CONTINUED)
FOR THE YEAR ENDED 31 MARCH 2024
- 2 -
Principal risks and uncertainties
The global and local economic environment is a concern, with inflationary cost price increases combining with little movement on book RRP. We have also seen substantial rises in paper and print costs as well as distribution and transport. We consistently negotiate with our suppliers, but this is a significant challenge to the business over which we have limited control.
Political instability is ever present and we retain a watching brief on where we can sell into and print from in line with our values and guidelines.
The ongoing uncertainty following Brexit continues to be a long-term concern for imports and exports that the directors monitor for impact on the business. The previous UK government’s lack of clarity around any change to the current exhaustion of rights regime is a serious concern and we are grateful to the Publishers Association for their continuing dialogue with the government on this threat to our industry. We have yet to see where the new government will focus in terms of the industry but we welcome the number of authors already present in the cabinet! We are engaged with the impact of AI in our publishing business and see this as having potential to advantage some areas of the sector.
Our credit risk was managed through Grantham Books Services (GBS), our UK book distributor, with the majority also covered by credit risk insurance. Other debt is regularly reviewed and followed up. However following GBS’s notice of warehouse closure to third party customers we have moved to HarperCollins in Glasgow and manage our credit risk with them and our underwriters, Allianz of Euler Hermes UK.
We maintain and regularly update processes and systems to work safely in a hybrid manner with disaster recovery plans in place and external back up in the event of a system collapse. Business interruption insurance is annually assessed and renewed.
We continue to assess all our titles for potential libel and a full libel read is undertaken where this is considered necessary. We engage the services of Reviewed and Cleared to work with us on such titles. Libel insurance is also in place.
As a publisher who sells books and rights internationally we incur foreign exchange risk; this is managed with foreign currency exposure regularly reviewed and minimised.
Reducing our carbon footprint and contributing towards building a cleaner and safer planet for the future is included in our corporate strategic aims as we consider this one of the key changes in business behaviour that we must adopt and actively support.
Key performance indicators
2024 2023
Increase / (decrease) in turnover (8%) (29%)
Operating profit as a percentage of turnover 3% 8%
Current assets to current liabilities 2.36 2.19
CANONGATE BOOKS LIMITED
STRATEGIC REPORT (CONTINUED)
FOR THE YEAR ENDED 31 MARCH 2024
- 3 -
Canongate: Other Performance Indicators
New books published into print editions in the year 91 93
Gender proportion of titles acquired (female:male *) 47:53 44:56
Ethnicity proportion of titles acquired (Writer of colour:white) 13:87 30:70
*Includes trans men
Severn House: Other Performance Indicators
2024 2023
New books published into print editions in the year 81 70
Gender proportion of titles acquired (female:male) 63:37 65:35
Ethnicity proportion of titles acquired (Writer of colour:white) 2:98 4:96
Mr. D Young (Chair)
Director
5 October 2024
CANONGATE BOOKS LIMITED
DIRECTORS' REPORT
FOR THE YEAR ENDED 31 MARCH 2024
- 4 -
The directors present their annual report and financial statements for the year ended 31 March 2024.
Chairman's Statement
The company had another impressive year, with turnover of £18.2 m and delivering £678k in profit before tax.
In the twelve months to 31 March 24 the company paid its authors and their agents £8.8m, which represents 49% of turnover.
The company made no political contributions or incurred any political expenditure during the year.
The company contributed £12.3k to charity within the year and continued to support the following charities and organisations:
• Social Bite
• St Mungo’s
• The Society of Young Publishers Conference
• Publishing Scotland
• English and Scottish PEN
• The Book Trade Charity
Principal activities
The principal activity of the company continued to be that of general trade publishing.
Results and dividends
The results for the year are set out on page 10.
Ordinary dividends were paid amounting to £451,050. 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:
Mr. F Bickmore
Mr. J Byng
Ms. J Fry
Ms. K Gibb
Ms. C Gorham
Mrs. A Ollard
Mr. D Olusoga
Mr. D Young (Chair)
CANONGATE BOOKS LIMITED
DIRECTORS' REPORT (CONTINUED)
FOR THE YEAR ENDED 31 MARCH 2024
- 5 -
Statement of business principles
1. Has a purpose which delivers long term sustainable performance:
(1) Operates true to a purpose that serves society, respects the dignity of people and so generates a fair return for responsible investors.
(2) Enables and welcomes public scrutiny of the alignment between stated purpose and actual performance.
2. Honest and fair with customers and suppliers:
(1) Seeks to build lasting relationships with customers and suppliers.
(2) Deals honestly with customers, providing good and safe products and services.
(3) Treats suppliers fairly, pays promptly what it owes and expects its suppliers to do the same.
(4) Openly shares its knowledge to enable customers and suppliers to make better informed choices.
3. A responsible and responsive employer:
(1) Treats everyone with dignity and provides fair pay for all.
(2) Enables and welcomes constructive dialogue about its behaviour in keeping true to its purpose.
(3) Fosters innovation, leadership and personal accountability.
(4) Protects and nurtures all who work for it to ensure people also learn, contribute and
thrive.
4. A good citizen:
(1) Considers each person affected by its decisions as if they were a member of each decision-maker’s own community.
(2) Seeks and provides access to opportunities for less privileged people.
(3) Makes a full and fair contribution to society by structuring its business and operations to pay promptly all taxes that are properly due.
5. A guardian for future generations:
(1) Honours its duty to protect the natural world and conserve finite resources.
(2) Contributes knowledge and experience to promote better regulation for the benefit of society as a whole rather than protecting self-interest.
(3) Invests in developing skills, knowledge and understanding in wider society to encourage informed citizenship.
CANONGATE BOOKS LIMITED
DIRECTORS' REPORT (CONTINUED)
FOR THE YEAR ENDED 31 MARCH 2024
- 6 -
Statement of directors' responsibilities
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 company and of the profit or loss of the company for that period. In preparing these financial statements, the directors are required to:
select suitable accounting policies and then apply them consistently;
make judgements and accounting estimates that are reasonable and prudent;
prepare the financial statements on the going concern basis unless it is inappropriate to presume that the company will 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 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.
Strategic report
The company has chosen in accordance with Companies Act 2006, s. 414C(11) to set out in the company's strategic report information required by Large and Medium-sized Companies and Groups (Accounts and Reports) Regulations 2008, Sch. 7 to be contained in the directors' report. It has done so in respect of the fair review of the business, events after the balance sheet date and an assessment of the business risks that effect the company.
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 company’s auditor 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 company’s auditor is aware of that information.
On behalf of the board
Mr. D Young (Chair)
Director
5 October 2024
CANONGATE BOOKS LIMITED
INDEPENDENT AUDITOR'S REPORT
TO THE MEMBERS OF CANONGATE BOOKS LIMITED
- 7 -
Opinion
We have audited the financial statements of Canongate Books Limited (the 'company') for the year ended 31 March 2024 which comprise the statement of comprehensive income, the balance sheet, the statement of changes in equity, the 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 the financial statements:
give a true and fair view of the state of the company's affairs as at 31 March 2024 and of its profit for the year 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.
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.
CANONGATE BOOKS LIMITED
INDEPENDENT AUDITOR'S REPORT (CONTINUED)
TO THE MEMBERS OF CANONGATE BOOKS LIMITED
- 8 -
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 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, 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.
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 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.
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.
CANONGATE BOOKS LIMITED
INDEPENDENT AUDITOR'S REPORT (CONTINUED)
TO THE MEMBERS OF CANONGATE BOOKS LIMITED
- 9 -
Extent to which 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 and on the Financial Reporting Council’s website, to detect material misstatements in respect of irregularities, including fraud.
We obtain and update our understanding of the entity, its activities, its control environment, and likely future developments, including in relation to the legal and regulatory framework applicable and how the entity is complying with that framework. Based on this understanding, we 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. This includes consideration of the risk of acts by the entity that were contrary to applicable laws and regulations, including fraud.
In response to the risk of irregularities and non-compliance with laws and regulations, including fraud, we designed procedures which included:
Enquiry of management and those charged with governance around actual and potential litigation and claims as well as actual, suspected and alleged fraud;
Reviewing minutes of meetings of those charged with governance;
Assessing the extent of compliance with the laws and regulations considered to have a direct material effect on the financial statements or the operations of the company through enquiry and inspection;
Reviewing financial statement disclosures and testing to supporting documentation to assess compliance with applicable laws and regulations;
Performing audit work over the risk of management bias and override of controls, including testing of journal entries and other adjustments for appropriateness, evaluating the business rationale of significant transactions outside the normal course of business and reviewing accounting estimates for indicators of potential bias.
Because of the inherent limitations of an audit, there is a risk that we will not detect all irregularities, including those leading to a material misstatement in the financial statements or non-compliance with regulation. This risk increases the more that compliance with a law or regulation is removed from the events and transactions reflected in the financial statements, as we will be less likely to become aware of instances of non-compliance. 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.
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.
Paul Hutchison BSc ACA
Senior Statutory Auditor
For and on behalf of Azets Audit Services
28 October 2024
Chartered Accountants
Statutory Auditor
Quay 2
139 Fountainbridge
Edinburgh
EH3 9QG
CANONGATE BOOKS LIMITED
STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEAR ENDED 31 MARCH 2024
- 10 -
2024
2023
Notes
£
£
Turnover
3
18,165,718
19,765,054
Cost of sales
(10,555,527)
(10,760,060)
Gross profit
7,610,191
9,004,994
Distribution costs
(1,360,804)
(1,579,335)
Administrative expenses
(5,614,888)
(5,763,894)
Operating profit
4
634,499
1,661,765
Interest receivable and similar income
7
43,441
2,615
Interest payable and similar expenses
8
(14,472)
Profit before taxation
677,940
1,649,908
Tax on profit
9
(283,663)
(389,209)
Profit for the financial year
394,277
1,260,699
The profit and loss account has been prepared on the basis that all operations are continuing operations.
CANONGATE BOOKS LIMITED
BALANCE SHEET
AS AT 31 MARCH 2024
31 March 2024
- 11 -
2024
2023
Notes
£
£
£
£
Fixed assets
Goodwill
11
1,392,969
1,757,791
Tangible assets
12
439,391
432,374
Investments
13
72
72
1,832,432
2,190,237
Current assets
Stocks
15
975,542
1,263,899
Debtors
16
8,201,160
8,166,668
Cash at bank and in hand
4,488,623
4,347,970
13,665,325
13,778,537
Creditors: amounts falling due within one year
17
(5,863,501)
(6,300,705)
Net current assets
7,801,824
7,477,832
Net assets
9,634,256
9,668,069
Capital and reserves
Called up share capital
19
451,050
447,050
Share premium account
759,705
740,745
Capital redemption reserve
149,457
149,457
Profit and loss reserves
8,274,044
8,330,817
Total equity
9,634,256
9,668,069
The financial statements were approved by the board of directors and authorised for issue on 5 October 2024 and are signed on its behalf by:
Mr. D Young (Chair)
Director
Company Registration No. SC152259
CANONGATE BOOKS LIMITED
STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 MARCH 2024
- 12 -
Share capital
Share premium account
Capital redemption reserve
Profit and loss reserves
Total
Notes
£
£
£
£
£
Balance at 1 April 2022
594,507
740,745
2,000
10,478,931
11,816,183
Period ended 31 March 2023:
Profit and total comprehensive income for the period
-
-
-
1,260,699
1,260,699
Dividends
10
-
-
-
(558,813)
(558,813)
Redemption of shares
19
(147,457)
147,457
(2,850,000)
(2,850,000)
Balance at 31 March 2023
447,050
740,745
149,457
8,330,817
9,668,069
Year ended 31 March 2024:
Profit and total comprehensive income for the year
-
-
-
394,277
394,277
Issue of share capital
19
4,000
18,960
-
-
22,960
Dividends
10
-
-
-
(451,050)
(451,050)
Balance at 31 March 2024
451,050
759,705
149,457
8,274,044
9,634,256
CANONGATE BOOKS LIMITED
STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED 31 MARCH 2024
- 13 -
2024
2023
Notes
£
£
£
£
Cash flows from operating activities
Cash generated from operations
22
805,350
2,200,141
Interest paid
(14,472)
Income taxes paid
(239,031)
(541,213)
Net cash inflow from operating activities
566,319
1,644,456
Investing activities
Purchase of tangible fixed assets
(41,017)
(65,990)
Interest received
43,441
2,615
Net cash generated from/(used in) investing activities
2,424
(63,375)
Financing activities
Proceeds from issue of shares
22,960
-
Purchase of own shares
(2,850,000)
Repayment of bank loans
(868,750)
Dividends paid
(451,050)
(558,813)
Net cash used in financing activities
(428,090)
(4,277,563)
Net increase/(decrease) in cash and cash equivalents
140,653
(2,696,482)
Cash and cash equivalents at beginning of year
4,347,970
7,044,452
Cash and cash equivalents at end of year
4,488,623
4,347,970
CANONGATE BOOKS LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2024
- 14 -
1
Accounting policies
Company information
Canongate Books Limited is a private company limited by shares incorporated in Scotland. The registered office is 14 High Street, Edinburgh, United Kingdom, EH1 1TE.
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
Going concern
The company has reported a profit for the year and has substantial cash reserves and net current assets at year end.true
The directors have prepared forecasts for a period of at least twelve months from accounts sign off and they have a reasonable expectation that the company will continue in operational existence for the foreseeable future and they therefore continue to adopt the going concern basis of accounting in preparing the financial statements.
1.3
Turnover
Turnover represents income received from general trade publishing.
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 trade discounts.
Revenue from the sale of goods is recognised when the significant risks and rewards of ownership of the goods have passed to the buyer (usually on dispatch of the goods), the amount of revenue can be measured reliably, it is probable that the economic benefits associated with the transaction will flow to the entity and the costs incurred or to be incurred in respect of the transaction can be measured reliably.
1.4
Intangible fixed assets - goodwill
Goodwill represents the excess of the cost of acquisition of unincorporated businesses over the fair value of net assets acquired, and amounts recognised on the hive up of the trade of subsidiary undertakings. It is initially recognised as an asset at cost less accumulated amortisation and accumulated impairment losses. Goodwill is considered to have a finite useful life and is amortised on a systematic basis over its expected life, which is 20 and 7 years respectively.
1.5
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:
Freehold land and buildings
2% straight line
Fixtures and fittings
25% straight line
Motor vehicles
20% staight line
CANONGATE BOOKS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 MARCH 2024
1
Accounting policies
(Continued)
- 15 -
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 credited or charged to profit or loss.
1.6
Fixed asset investments
Interests in subsidiaries and associates are initially measured at cost and subsequently measured at cost less any accumulated impairment losses. The investments are assessed for impairment at each reporting date and any impairment losses or reversals of impairment losses are recognised immediately in profit or loss.
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 company considers that it has significant influence where it has the power to participate in the financial and operating decisions of the associate.
1.7
Impairment of fixed assets
At each reporting period end date, the company 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).
1.8
Stocks
Stocks are stated at the lower of cost and estimated selling price less costs to complete and sell. Cost comprises direct materials and, where applicable, direct labour costs and those overheads that have been incurred in bringing the stocks to their present location and condition.
At each reporting date, an assessment is made for impairment. Any excess of the carrying amount of stocks over its estimated selling price less costs to complete and sell is recognised as an impairment loss in profit or loss. Reversals of impairment losses are also recognised in profit or loss.
1.9
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.
1.10
Financial instruments
The company 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 company's balance sheet when the company becomes party to the contractual provisions of the instrument.
Financial assets and liabilities are offset, with 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 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.
CANONGATE BOOKS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 MARCH 2024
1
Accounting policies
(Continued)
- 16 -
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 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.
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 company 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.
Derecognition of financial liabilities
Financial liabilities are derecognised when the company’s contractual obligations expire or are discharged or cancelled.
1.11
Equity instruments
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.
1.12
Taxation
The tax expense represents the sum of the tax currently payable and deferred tax.
CANONGATE BOOKS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 MARCH 2024
1
Accounting policies
(Continued)
- 17 -
Current tax
The tax currently payable is based on taxable profit for the year. Taxable profit differs from net profit as reported in the profit and loss account 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 company’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. Deferred tax is charged or credited in the profit and loss account, except when it relates to items charged or credited directly to equity, in which case the deferred tax is also dealt with in equity. 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.
1.13
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.
1.14
Retirement benefits
Payments to defined contribution retirement benefit schemes are charged as an expense as they fall due.
1.15
Leases
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 leases asset are consumed.
1.16
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.
CANONGATE BOOKS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 MARCH 2024
- 18 -
2
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.
The significant estimates and judgements are:
Prepayments and accrued income includes advances to authors, which are only recoverable if the related title earns out the advance. Therefore management is required to make significant judgements to estimate the recoverable amount.
Reduction in the carrying value of stocks to their net realisable value.
Determine whether there are indicators of impartment of the group's tangible and intangible assets, including goodwill. Factors taken into consideration in reaching such a decision include the economic viability and expected future financial performance of the asset.
3
Turnover and other revenue
2024
2023
£
£
Turnover analysed by geographical market
United Kingdom
5,963,506
8,154,495
Rest of Europe
3,301,385
2,929,986
Rest of the world
8,900,827
8,680,573
18,165,718
19,765,054
2024
2023
£
£
Other revenue
Interest income
43,441
2,615
4
Operating profit
2024
2023
Operating profit for the year is stated after charging/(crediting):
£
£
Exchange losses/(gains)
25,202
(61,381)
Fees payable to the company's auditor for the audit of the company's financial statements
27,225
27,625
Depreciation of owned tangible fixed assets
34,000
21,619
Amortisation of intangible assets
364,822
364,822
Operating lease charges
191,653
139,260
CANONGATE BOOKS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 MARCH 2024
- 19 -
5
Employees
The average monthly number of persons (including directors) employed by the company during the year was:
2024
2023
Number
Number
66
62
Their aggregate remuneration comprised:
2024
2023
£
£
Wages and salaries
2,806,301
2,810,072
Social security costs
338,460
338,694
Pension costs
204,609
180,970
3,349,370
3,329,736
6
Directors' remuneration
2024
2023
£
£
Remuneration for qualifying services
852,579
728,275
Company pension contributions to defined contribution schemes
42,155
38,149
894,734
766,424
Remuneration disclosed above include the following amounts paid to the highest paid director:
2024
2023
£
£
Remuneration for qualifying services
205,774
223,974
Company pension contributions to defined contribution schemes
12,740
12,162
7
Interest receivable and similar income
2024
2023
£
£
Interest income
Interest on bank deposits
43,441
2,615
2024
2023
Investment income includes the following:
£
£
Interest on financial assets not measured at fair value through profit or loss
43,441
2,615
CANONGATE BOOKS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 MARCH 2024
- 20 -
8
Interest payable and similar expenses
2024
2023
£
£
Interest on financial liabilities measured at amortised cost:
Interest on bank overdrafts and loans
-
14,472
9
Taxation
2024
2023
£
£
Current tax
UK corporation tax on profits for the current period
283,663
389,209
The actual charge for the year can be reconciled to the expected charge for the year based on the profit or loss and the standard rate of tax as follows:
2024
2023
£
£
Profit before taxation
677,940
1,649,908
Expected tax charge based on the standard rate of corporation tax in the UK of 25.00% (2023: 19.00%)
169,485
313,483
Tax effect of expenses that are not deductible in determining taxable profit
13,185
12,369
Adjustments in respect of prior years
(7,522)
Fixed asset differences
2,407
(121,367)
Remeasurement of deferred tax for changes in tax rates
(58,481)
Deferred tax not recognised
106,108
243,672
Other tax adjustments, reliefs and transfers
(467)
Taxation charge for the year
283,663
389,209
10
Dividends
2024
2023
£
£
Dividend paid
451,050
558,813
CANONGATE BOOKS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 MARCH 2024
- 21 -
11
Intangible fixed assets
Goodwill
£
Cost
At 1 April 2023 and 31 March 2024
2,768,399
Amortisation and impairment
At 1 April 2023
1,010,608
Amortisation charged for the year
364,822
At 31 March 2024
1,375,430
Carrying amount
At 31 March 2024
1,392,969
At 31 March 2023
1,757,791
12
Tangible fixed assets
Freehold land and buildings
Fixtures and fittings
Motor vehicles
Total
£
£
£
£
Cost
At 1 April 2023
481,439
305,633
65,990
853,062
Additions
41,017
41,017
At 31 March 2024
481,439
346,650
65,990
894,079
Depreciation and impairment
At 1 April 2023
128,317
289,822
2,549
420,688
Depreciation charged in the year
9,629
14,173
10,198
34,000
At 31 March 2024
137,946
303,995
12,747
454,688
Carrying amount
At 31 March 2024
343,493
42,655
53,243
439,391
At 31 March 2023
353,122
15,811
63,441
432,374
13
Fixed asset investments
2024
2023
Notes
£
£
Investments in associates
14
72
72
14
Associates
Details of the company's associates at 31 March 2024 are as follows:
CANONGATE BOOKS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 MARCH 2024
14
Associates
(Continued)
- 22 -
Name of undertaking
Registered office
Class of
% Held
shares held
Direct
Letters Live Limited
Eardley House, 4
Uxbridge Street, London,
W8 7SY
Ordinary
36.00
15
Stocks
2024
2023
£
£
Work in progress
99,401
161,553
Finished goods and goods for resale
876,141
1,102,346
975,542
1,263,899
16
Debtors
2024
2023
Amounts falling due within one year:
£
£
Trade debtors
5,178,522
5,267,471
Other debtors
457,799
782,642
Prepayments and accrued income
2,564,839
2,116,555
8,201,160
8,166,668
17
Creditors: amounts falling due within one year
2024
2023
£
£
Trade creditors
1,985,900
2,225,043
Corporation tax
123,637
79,005
Other taxation and social security
79,595
72,981
Other creditors
1,951,717
2,547,390
Accruals and deferred income
1,722,652
1,376,286
5,863,501
6,300,705
18
Retirement benefit schemes
2024
2023
Defined contribution schemes
£
£
Charge to profit or loss in respect of defined contribution schemes
204,609
180,970
The company operates a defined contribution pension scheme for all qualifying employees. The assets of the scheme are held separately from those of the company in an independently administered fund.
CANONGATE BOOKS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 MARCH 2024
- 23 -
19
Share capital
2024
2023
2024
2023
Ordinary share capital
Number
Number
£
£
Issued and fully paid
Alotted, called up and fully paid of £1 each
451,050
447,050
451,050
447,050
During the year 4,000 ordinary shares were issued for cash consdieration of £5.74 each.
20
Operating lease commitments
Lessee
At the reporting end date the company had outstanding commitments for future minimum lease payments under non-cancellable operating leases, which fall due as follows:
2024
2023
£
£
Within one year
102,370
65,930
Between two and five years
310,956
366,905
413,326
432,835
21
Related party transactions
Canongate Books Limited owns 36% of Letters Live Limited (2023: 36%). As at 31 March 2023 the balance due from Letters Live Limited was £100,546 (2023: £72,500).
22
Cash generated from operations
2024
2023
£
£
Profit for the year after tax
394,277
1,260,699
Adjustments for:
Taxation charged
283,663
389,209
Finance costs
14,472
Investment income
(43,441)
(2,615)
Amortisation and impairment of intangible assets
364,822
364,822
Depreciation and impairment of tangible fixed assets
34,000
21,619
Movements in working capital:
Decrease in stocks
288,357
41,598
(Increase)/decrease in debtors
(34,492)
2,667,568
Decrease in creditors
(481,836)
(2,557,231)
Cash generated from operations
805,350
2,200,141
CANONGATE BOOKS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 MARCH 2024
- 24 -
23
Analysis of changes in net funds
1 April 2023
Cash flows
31 March 2024
£
£
£
Cash at bank and in hand
4,347,970
140,653
4,488,623
2024-03-312023-04-01falseCCH SoftwareCCH Accounts Production 2024.210Mr. F BickmoreMr. J ByngMs. J FryMs. C GorhamMrs. A OllardMr. D OlusogaMr. D Young (Chair)Mr. D Young (Chair)Ms. K GibbfalsefalseSC1522592023-04-012024-03-31SC152259bus:Director12023-04-012024-03-31SC152259bus:Director22023-04-012024-03-31SC152259bus:Director32023-04-012024-03-31SC152259bus:CompanySecretaryDirector12023-04-012024-03-31SC152259bus:Director42023-04-012024-03-31SC152259bus:Director52023-04-012024-03-31SC152259bus:Director62023-04-012024-03-31SC152259bus:Director72023-04-012024-03-31SC152259bus:CompanySecretary12023-04-012024-03-31SC152259bus:Director82023-04-012024-03-31SC152259bus:RegisteredOffice2023-04-012024-03-31SC152259bus:Agent12023-04-012024-03-31SC1522592024-03-31SC1522592022-04-012023-03-31SC152259core:RetainedEarningsAccumulatedLosses2022-04-012023-03-31SC152259core:RetainedEarningsAccumulatedLosses2023-04-012024-03-31SC152259core:Goodwill2024-03-31SC152259core:Goodwill2023-03-31SC1522592023-03-31SC152259core:LandBuildingscore:OwnedOrFreeholdAssets2024-03-31SC152259core:FurnitureFittings2024-03-31SC152259core:MotorVehicles2024-03-31SC152259core:LandBuildingscore:OwnedOrFreeholdAssets2023-03-31SC152259core:FurnitureFittings2023-03-31SC152259core:MotorVehicles2023-03-31SC152259core:CurrentFinancialInstrumentscore:WithinOneYear2024-03-31SC152259core:CurrentFinancialInstrumentscore:WithinOneYear2023-03-31SC152259core:CurrentFinancialInstruments2024-03-31SC152259core:CurrentFinancialInstruments2023-03-31SC152259core:ShareCapital2024-03-31SC152259core:ShareCapital2023-03-31SC152259core:SharePremium2024-03-31SC152259core:SharePremium2023-03-31SC152259core:CapitalRedemptionReserve2024-03-31SC152259core:CapitalRedemptionReserve2023-03-31SC152259core:RetainedEarningsAccumulatedLosses2024-03-31SC152259core:RetainedEarningsAccumulatedLosses2023-03-31SC152259core:ShareCapital2022-03-31SC152259core:SharePremium2022-03-31SC152259core:CapitalRedemptionReserve2022-03-31SC152259core:RetainedEarningsAccumulatedLosses2022-03-31SC152259core:ShareCapital2022-04-012023-03-31SC152259core:SharePremium2022-04-012023-03-31SC152259core:ShareCapital2023-04-012024-03-31SC152259core:SharePremium2023-04-012024-03-31SC15225912023-04-012024-03-31SC15225912022-04-012023-03-31SC1522592023-03-31SC1522592022-03-31SC152259core:Goodwill2023-04-012024-03-31SC152259core:LandBuildingscore:OwnedOrFreeholdAssets2023-04-012024-03-31SC152259core:FurnitureFittings2023-04-012024-03-31SC152259core:MotorVehicles2023-04-012024-03-31SC152259core:UKTax2023-04-012024-03-31SC152259core:UKTax2022-04-012023-03-31SC15225922023-04-012024-03-31SC15225922022-04-012023-03-31SC15225932023-04-012024-03-31SC15225932022-04-012023-03-31SC15225942023-04-012024-03-31SC15225942022-04-012023-03-31SC152259core:Goodwill2023-03-31SC152259core:LandBuildingscore:OwnedOrFreeholdAssets2023-03-31SC152259core:FurnitureFittings2023-03-31SC152259core:MotorVehicles2023-03-31SC152259core:Non-currentFinancialInstruments2024-03-31SC152259core:Non-currentFinancialInstruments2023-03-31SC152259core:WithinOneYear2024-03-31SC152259core:WithinOneYear2023-03-31SC152259core:BetweenTwoFiveYears2024-03-31SC152259core:BetweenTwoFiveYears2023-03-31SC152259bus:PrivateLimitedCompanyLtd2023-04-012024-03-31SC152259bus:FRS1022023-04-012024-03-31SC152259bus:Audited2023-04-012024-03-31SC152259bus:FullAccounts2023-04-012024-03-31xbrli:purexbrli:sharesiso4217:GBP