Registered number: 06525088
FERNLAKES LIMITED
GROUP ANNUAL REPORT AND FINANCIAL STATEMENTS
FOR THE YEAR ENDED 29 DECEMBER 2023
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FERNLAKES LIMITED
COMPANY INFORMATION
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FERNLAKES LIMITED
CONTENTS
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Independent Auditor's Report
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Consolidated Profit and Loss Account
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Consolidated Balance Sheet
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Consolidated Statement of Changes in Equity
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Company Statement of Changes in Equity
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Consolidated Statement of Cash Flows
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Notes to the Financial Statements
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FERNLAKES LIMITED
GROUP STRATEGIC REPORT
FOR THE YEAR ENDED 29 DECEMBER 2023
The Group Strategic Report has been prepared for Fernlakes Limited (the "Company") and the Fernlakes Limited group of companies (the "Group") for the year ended 29 December 2023.
Principal activity and review of the business
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The principal activities of the Group include managing its remaining trading and investment activities to the media, real estate and infrastructure sectors. Commercially, the trading activities of the Group have been very low in recent years. The Group has recognised an increase in turnover in the year due to the disposal of film proceeds. The Group generated a profit after tax of £652k (2022: restated loss after tax of £8,273k).
The Directors are not aware of any other significant changes in the Group's activities in the next year.
Principal risks and uncertainties
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The Group actively manages risks and uncertainties facing its business by undertaking regular strategic reviews. The Board has put in place appropriate corporate governance structures to support its oversight of the firm’s risk management framework, which include:
Business Risk
Business risk is the risk of failure of the business to execute its business strategy and therefore being unsuccessful in achieving projected returns. The factors affecting this risk include changes to tax legislation. Please refer to note 10 Taxation for further details.
External Risks
These include risks affecting the economic, political, regulatory and legal environment in which the Group operates. Changes in legislation will therefore have a significant impact on the Group, thus appropriate resources are deployed to perform detailed assessments of current legislation, as well as understand and predict the sentiment of the future political and regulatory environment.
Operational Risk
Operational risk relates to the efficacy of the Group's systems, controls and processes. The Group's Risk Management Committee is responsible for overseeing the design and operational effectiveness of our systems and controls, and are monitored on a regular basis. Any significant risks or issues identified are immediately assessed, resolved and debriefed to ensure any possible future related risks are mitigated to the utmost.
Dividends
The results for the Group for the year are set out on page 10.
The Directors do not propose to pay a dividend to the class 'A' shareholders (2022: £nil).
Financial instruments and risk management
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The Group's activities expose it to a number of financial risks including liquidity risk, interest rate risk and credit risk.
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FERNLAKES LIMITED
GROUP STRATEGIC REPORT (CONTINUED)
FOR THE YEAR ENDED 29 DECEMBER 2023
(a) Liquidity risk
The Group manages its liquidity assets in order to maximise returns, whilst ensuring the Group has sufficient liquid resources to meet the operating needs of the business as well as the regulatory capital requirements as laid down by the Financial Conduct Authority.
(b) Interest rate risk
The Group is exposed to interest rate risk on its lending and deposit balances. The Group negotiates a fixed margin of interest payable on borrowings and seeks to maximise its margin on interest receivable, subject to the requirements of liquidity risk noted above.
(c) Credit risk
The Group's principal financial assets are cash, trade debtors and loans receivable, to which the Group’s credit risk is primarily attributable. The Group regularly reviews its treasury management strategy based upon all available information. Where loans are provided in the normal course of business, credit reviews are undertaken where possible.
Statement in compliance with section 172(1) of Companies Act 2006
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The Directors of the Group are acutely aware of the requirement for them to act in the way they consider, in good faith, would be most likely to promote the success of the Group for the benefit of its members as a whole. In considering this duty the Directors consider the following stakeholders:
Shareholders
The shares of the Company are 100% owned by Patrick McKenna. Patrick McKenna is also a Director of the Company.
Customers
Customers of the Group mainly consist of investors into the funds that the Group operates, being private individuals, their financial advisors, and other intermediaries. The Group also has a small number of corporate customers. The Group is focused on providing quality discretionary management services to its entire customer base. Treating customers fairly is ingrained in the organisation. Engagement with customers is mainly through the investment portal and the client services team.
Suppliers
Relationships with suppliers are maintained through regular contact and interaction. The Group does not follow any specific code or standard on payment of creditors. The Group agrees the payment terms as part of the commercial arrangement negotiated with counterparties. Payments are made on these terms provided the counterparty meets its obligations.
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FERNLAKES LIMITED
GROUP STRATEGIC REPORT (CONTINUED)
FOR THE YEAR ENDED 29 DECEMBER 2023
HMRC
The relationship with HMRC is maintained through a dedicated tax team.
Community and the environment
The Group has a minimal direct impact on the environment as it is currently only managing its existing investments and is currently not involved in any new investment activity. However, the Group remains committed to having a positive impact on the sectors and communities it operates in.
Other stakeholders
The Directors also consider the FCA a stakeholder as the regulator of Goldwoodshire Limited, a subsidiary in the Group.
Key factors impacting the Company during the year ended 29 December 2023
During the year the focus remained on the disposal of income rights of certain films (“Film Rights”).
The Directors of the Group and senior management have been able to financially close on the majority of films under the Film Rights sale in June 2024, which has generated significant revenue and cash for the Group. The Group will continue with the disposal of the remaining films during the next 12 months. Additionally, the Group awaits cash entitlements from the conclusion of the Group subsidiaries liquidation process, albeit the timing of these cash inflows are currently unknown as at the date of signing these financial statements.
Approved by the board of Directors and signed on its behalf by:
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FERNLAKES LIMITED
DIRECTORS' REPORT
FOR THE YEAR ENDED 29 DECEMBER 2023
The Directors present their report and the financial statements for the year ended 29 December 2023.
Directors' responsibilities statement
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The Directors are responsible for preparing the Group annual reports and 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 applicable law and United Kingdom Accounting Standards (United Kingdom Generally Accepted Accounting Practice), including Financial Reporting Standard 102 'The Financial Reporting Standard applicable in the UK and Republic of Ireland'. 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 the Group and of the profit or loss of the Group for that period.
In preparing these financial statements, the Directors are required to:
∙select suitable accounting policies for the Group's financial statements and then apply them consistently;
∙make judgements and accounting estimates that are reasonable and prudent;
∙state whether applicable UK Accounting Standards have been followed, subject to any material departures disclosed and explained in the financial statements;
∙prepare the financial statements on the going concern basis unless it is inappropriate to presume that the Group 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 the Group and to enable them to ensure that the financial statements comply with the Companies Act 2006. They are also responsible for safeguarding the assets of the Company and the Group and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.
The Directors are responsible for the maintenance and integrity of the corporate and financial information included on the Group's website. Legislation in the United Kingdom governing the preparation and dissemination of financial statements and other information included in Directors' Reports may differ from legislation in other jurisdictions.
The Directors who served during the year and subsequently were as follows:
N A Forster (resigned 6 March 2024)
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Please refer to note 6 Directors' remuneration.
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FERNLAKES LIMITED
DIRECTORS' REPORT (CONTINUED)
FOR THE YEAR ENDED 29 DECEMBER 2023
The Company’s business activities including the impact from the outcome of the tax litigation (as further discussed in note 10), as well as macroeconomic factors such as sustained high interest rates and the cost of living crisis have been reviewed by the Directors.
Having assessed these risks including those set out in the Group Strategic Report, its financial position, and results and cash flow forecasts, the Directors intend to continue operating its business and have a reasonable expectation that the Company and the Group have adequate resources to continue in operational existence for the foreseeable future. The going concern basis of accounting is appropriate however there are material uncertainties related to events or conditions that may cast significant doubt upon the Company’s and the Group's ability to continue to adopt the going concern basis of accounting in the future.
Further details regarding the adoption of the going concern basis can be found in note 1.2.
The Group does not follow a specific code or standard on payment of creditors. The Group agrees the payment terms as part of the commercial arrangement negotiated with suppliers. Payments are made on these terms provided the supplier meets its obligations.
During the year the Group made charitable donations of £10k (2022: £Nil).
Provision of insurance to Directors
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All Directors were covered by Directors' and Officers' liability insurance throughout the year under review and this will continue to remain in force.
The auditor, BDO LLP, will be proposed for reappointment in accordance with section 485 of the Companies Act 2006.
This report was approved by the board of directors and signed on its behalf by:
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FERNLAKES LIMITED
INDEPENDENT AUDITOR'S REPORT TO THE MEMBERS OF FERNLAKES LIMITED
Opinion on the financial statements
In our opinion:
∙the financial statements give a true and fair view of the state of the Group’s and of the Company’s affairs as at 29 December 2023 and of the Group’s profit for the year then ended;
∙the financial statements have been properly prepared in accordance with United Kingdom Generally Accepted Accounting Practice; and
∙the financial statements have been prepared in accordance with the requirements of the Companies Act 2006.
We have audited the financial statements of Fernlakes Limited (the ‘Company’) and its subsidiaries (the ‘Group’) for the year ended 29 December 2023 which comprise Consolidated Profit and Loss Account, the Consolidated and the Company Balance Sheets, the Consolidated and the Company Statements of Changes in Equity, the Consolidated Statement of Cash Flows, and notes to the financial statements, including a summary of 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).
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 believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
Independence
We are independent of the Group and the 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.
Material uncertainty related to going concern
We draw attention to Note 1.2 in the financial statements, which indicates that if some or all of the Group’s expected revenue and cash assumptions in relation to future film sales and liquidation of Group subsidiaries do not crystalise over the next 12 months, and should the legal dispute result in an unfavourable outcome, the Group and Company may be unable to discharge their liabilities, and fund their ongoing operations. As stated in Note 1.2, these events or conditions, along with other matters as set forth in Note 1.2 indicate that a material uncertainty exists that may cast significant doubt on the Company’s and Group’s ability to continue as going concerns. Our opinion is not modified in respect of this matter.
In auditing the financial statements, we have concluded that the Directors’ use of the going concern basis of accounting in the preparation of the financial statements is appropriate.
Our responsibilities and the responsibilities of the Directors with respect to going concern are described in the relevant sections of this report.
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FERNLAKES LIMITED
INDEPENDENT AUDITOR'S REPORT TO THE MEMBERS OF FERNLAKES LIMITED
Emphasis of matter- Tax liability
We draw attention to notes 2 and 10 in the financial statements which highlight the key sources of estimation uncertainties that the Directors have made in the process of determining the tax liability as at 29 December 2023. The tax estimates are based on the latest information available which is the outcome of the First-tier Tax Tribunal, as of the date of signing, the final outcome of the First-Tier Tribunal have not been released. Our opinion is not modified in respect of this matter.
Other information
The Directors are responsible for the other information. The other information comprises the information included in the Directors' report other than the financial statements and our auditor’s report thereon. Our opinion on the financial statements does not cover the other information and, except to the extent otherwise explicitly stated in our report, we do not express any form of assurance conclusion thereon.
Our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial statements, or our knowledge obtained in the course of the audit, or otherwise appears to be materially misstated. If we identify such material inconsistencies or apparent material misstatements, we are required to determine whether this gives rise to a material misstatement in the financial statements themselves. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact.
We have nothing to report in this regard.
Other Companies Act 2006 reporting
In our opinion, based on the work undertaken in the course of the audit:
∙the information given in the Group 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 Group Strategic report and the Directors’ report has been prepared in accordance with applicable legal requirements.
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 Group 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 Directors’ 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
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FERNLAKES LIMITED
INDEPENDENT AUDITOR'S REPORT TO THE MEMBERS OF FERNLAKES LIMITED
concern basis of accounting unless the Directors either intend to liquidate the Group 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.
Extent to which the audit was 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:
Non-compliance with laws and regulations
Based on:
∙Our understanding of the Group, the Company and the industry in which it operates;
∙Discussion with management and those charged with governance; and
∙Obtaining an understanding of the Group and the Company's policies and procedures regarding compliance with laws and regulations.
Our procedures in respect of the above included:
∙Review of minutes of meetings of those charged with governance for any instances of non-compliance with laws and regulations;
∙Review of correspondence with tax authorities for any instances of non-compliance with laws and regulations;
∙Review of financial statement disclosures and agreeing to supporting documentation;
∙Involvement of tax specialists in the audit.
Fraud
We assessed the susceptibility of the financial statements to material misstatement, including fraud. Our risk assessment procedures included:
∙Enquiry with management and those charged with governance regarding any known or suspected instances of fraud;
∙Obtaining an understanding of the Company's policies and procedures relating to:
°Detecting and responding to the risks of fraud; and
°Internal controls established to mitigate risks related to fraud.
∙Review of minutes of meetings of those charged with governance for any known or suspected instances of fraud;
∙Discussion amongst the engagement team as to how and where fraud might occur in the financial statements;
∙Performing analytical procedures to identify any unusual or unexpected relationships that may indicate risks of material misstatement due to fraud.
Based on our risk assessment, we considered the areas most susceptible to fraud to be management override of controls, completeness and accuracy of revenue recognised from film income, inappropriate accounting and disclosure of litigation costs incurred by the Group and cost allocation under transfer pricing.
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FERNLAKES LIMITED
INDEPENDENT AUDITOR'S REPORT TO THE MEMBERS OF FERNLAKES LIMITED
Our procedures in respect of the above included:
∙Performed an analytical review of the firm revenue between the prior and current year to make for consistency, ensuring that collections from prior ears have been collected in the current year and investigated and consistencies;
∙Obtained a sample of collection statement from production houses and verified collections made.
∙Testing a sample of journal entries throughout the year, which met a defined risk criteria, by agreeing to supporting documentation;
∙Assessing significant estimates made by management for bias; and
∙Obtaining independent confirmation of bank balances.
We also communicated relevant identified laws and regulations and potential fraud risks to all engagement team members who were all deemed to have appropriate competence and capabilities and remained alert to any indications of fraud or non-compliance with laws and regulations throughout the audit.
Our audit procedures were designed to respond to risks of material misstatement in the financial statements, recognising that the risk of not detecting a material misstatement due to fraud is higher than the risk of not detecting one resulting from error, as fraud may involve deliberate concealment by, for example, forgery, misrepresentations or through collusion. There are inherent limitations in the audit procedures performed and the further removed non-compliance with laws and regulations is from the events and transactions reflected in the financial statements, the less likely we are to become aware of it.
A further description of our responsibilities is available on the Financial Reporting Council’s website at: https://www.frc.org.uk /auditorsresponsibilities. This description forms part of our auditor’s report.
Use of our report
This report is made solely to the Parent Company’s members, as a body, in accordance with Chapter 3 of Part 16 of the Companies Act 2006. Our audit work has been undertaken so that we might state to the Parent Company’s members those matters we are required to state to them in an 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 Parent Company and the Parent Company’s members as a body, for our audit work, for this report, or for the opinions we have formed.
Peter Smith (Senior Statutory Auditor)
For and on behalf of BDO LLP, Statutory Auditor
London, United Kingdom
Date: 21 January 2025
BDO LLP is a limited liability partnership registered in England and Wales (with registered number OC305127).
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FERNLAKES LIMITED
CONSOLIDATED PROFIT AND LOSS ACCOUNT
FOR THE YEAR ENDED 29 DECEMBER 2023
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Profit on discontinued operations
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Total operating profit/(loss)
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(Expense)/ income from other participating interests
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Interest Receivable And Similar Income
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Interest payable and similar expenses
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Profit/(loss) for the financial year
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There are no items of other comprehensive income for 2023 or 2022 other than the profit/(loss) for the year. As a result, no separate Statement of Comprehensive Income has been presented.
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The notes on pages 16 to 46 form part of these financial statements.
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FERNLAKES LIMITED
REGISTERED NUMBER: 06525088
CONSOLIDATED BALANCE SHEET
AS AT 29 DECEMBER 2023
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Creditors: amounts falling due within one year
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Total assets less current liabilities
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Creditors: amounts falling due after more than one year
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Provisions for liabilities
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The financial statements were approved and authorised for issue by the board and were signed on its behalf by:
The notes on pages 16 to 46 form part of these financial statements.
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FERNLAKES LIMITED
REGISTERED NUMBER: 06525088
COMPANY BALANCE SHEET
AS AT 29 DECEMBER 2023
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Creditors: amounts falling due within one year
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Total assets less current liabilities
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Provisions for liabilities
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Profit and loss account brought forward
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Profit/(loss) for the year
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Profit and loss account carried forward
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The financial statements were approved and authorised for issue by the board and were signed on its behalf by:
The notes on pages 16 to 46 form part of these financial statements.
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FERNLAKES LIMITED
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 29 DECEMBER 2023
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Equity attributable to owners of parent Company
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Restated loss for the year
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The notes on pages 16 to 46 form part of these financial statements.
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FERNLAKES LIMITED
COMPANY STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 29 DECEMBER 2023
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Restated loss for the year
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The notes on pages 16 to 46 form part of these financial statements.
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FERNLAKES LIMITED
CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED 29 DECEMBER 2023
Cash flows from operating activities
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Profit/(loss) for the financial year
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Amortisation of intangible assets (note 12)
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Depreciation of tangible assets (note 13)
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(Increase)/decrease in debtors
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Increase/(decrease) in creditors
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Fair value adjustment of investments (note 11)
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Profit on deconsolidation of subsidiaries
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Net cash generated from/(used in) operating activities
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Cash flows from investing activities
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Purchase of tangible fixed assets
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Disposal of tangible fixed assets
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Deconsolidation of subsidiaries
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Net cash generated from investing activities
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Cash flows from financing activities
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(Repayment)/advance of loans
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Net cash used in financing activities
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Net (decrease) in cash and cash equivalents
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Cash and cash equivalents at beginning of year
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Cash and cash equivalents at the end of year
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Cash and cash equivalents at the end of year comprise:
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The notes on pages 16 to 46 form part of these financial statements.
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FERNLAKES LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 29 DECEMBER 2023
1.Accounting policies
The principal accounting policies are summarised below. They have been applied consistently throughout the current year and prior year.
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General information and basis of accounting
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The financial statements have been prepared under the historical cost convention unless otherwise specified within these accounting policies and in accordance with Financial Reporting Standard 102, the Financial Reporting Standard applicable in the UK and the Republic of Ireland and the Companies Act 2006.
Fernlakes Limited is a company incorporated in England and Wales under the Companies Act. Its place of business and registered office address is Parcels Building, 14 Bird Street, London, W1U 1BU. The nature of the Group and Company's operations and principal operating activity are set out in the Group Strategic Report on pages 1 to 3.
The functional currency of the Group and Company is considered to be pound sterling which is the currency of the primary economic environment in which the Group operates. Foreign currency transactions are included in accordance with the policies set out below.
The preparation of financial statements in compliance with FRS 102 requires the use of certain critical accounting estimates. It also requires Group management to exercise judgement in applying the Group's accounting policies (see note 2).
The Company has taken advantage of the exemption allowed under section 408 of the Companies Act 2006 and has not presented its own Profit and Loss Account in these financial statements.
The Company meets the definition of a qualifying entity under FRS 102 and has therefore taken advantage of the disclosure exemptions available to it in respect of its separate financial statements, which are presented alongside the consolidated financial statements. Exemptions have been taken, by the Company, in relation to financial instruments and presentation of a cash flow statement.
The following principal accounting policies have been applied:
The Company's going concern assessment has been performed as part of the Group's going concern assessment. The Group's business activities, together with the factors likely to affect its future development, performance and position are set out in the Group Strategic Report. The Group Strategic Report on pages 1 to 3 describes the Group's objectives, policies, its financial risk management objectives and its exposure to various risks.
The Directors have considered the impact from the outcome of the tax litigation (as further discussed in note 9), as well as macroeconomic factors such as sustained high interest rates and the cost of living crisis on the business. The Group is wholly based in the UK. The Directors do not believe that the remaining assets on the Balance Sheet will be impaired as a result of these circumstances, the Group does not have any direct employees, and the cost base of the Group should not be materially affected even after factoring in the current rise in inflation as a result of these events. Therefore, the Directors have concluded that the aforementioned events have had a minimal impact on the Group.
The Directors have reviewed the cash flow forecasts for 12 months following approval of these financial statements assuming a range of outcomes in relation to the tax litigation with HMRC. Currently, the Group is in a legal dispute with HMRC which is yet to be finalised. The Group is expecting to be in a position to provide financial support to its subsidiaries, however, should the legal
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FERNLAKES LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 29 DECEMBER 2023
1.Accounting policies (continued)
dispute result in an unfavourable outcome, the Group may be unable to provide the financial support.
At present, the Group is currently in a net current liability position as at the balance sheet date, however the Directors of the Group and senior management have successfully sold the majority of films under the Film Rights sale in June 2024, generating significant revenue and cash for the Group. Senior management are currently working to finalise the sale of the remaining films, which is expected to generate further revenue for the Group in 2025. Additionally, the Group awaits cash entitlements from the conclusion of the Group subsidiaries liquidation process, albeit the timing of these cash inflows are currently unknown as at the date of signing these financial statements. The Group is forecasted to return to an overall net asset position when the aforementioned events are completed, resulting in the Group undertakings being able to settle their debt with the Company.
However, if some or all of the Group’s expected revenue and cash assumptions in relation to future film sales and liquidation of Group subsidiaries do not crystalise over the next 12 months, and should the legal dispute result in an unfavourable outcome, the Group may be unable to trade out of its net liability position and discharge its liabilities and fund its ongoing operations. Furthermore, it may not be able to provide the necessary support to its subsidiaries, which will result in the subsidiaries needing to seek alternative funding. This indicates that a material uncertainty exists that may cast significant doubt on the Company’s and Group’s ability to continue as a going concern, and therefore, it may be unable to realise its assets and discharge its liabilities in the ordinary course of business. The financial statements do not include any adjustments that would be necessary should the going concern basis of preparation be inappropriate.
The financial statements represent the consolidated accounts of the Company and of each of its subsidiary undertakings. The results of subsidiary undertakings are included from the date on which control passes to the Group, and similarly excluded after the date on which the Group no longer controls the subsidiary. Subsidiaries are accounted for under the acquisition method unless otherwise noted.
The Profit and Loss Account of the Company is not included in the financial statements as permitted by section 408 of the Companies Act 2006. The Company's profit for the financial year amounted to £652k (2022: restated loss of £8,273k).
Certain dormant subsidiaries of the Company have taken advantage of the Companies Act 2006 s480A exemption from audit of accounts. These subsidiaries are exempt from the requirement for an audit of the accounts by virtue of this section and are disclosed as dormant in note 10.
|
FERNLAKES LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 29 DECEMBER 2023
1.Accounting policies (continued)
Turnover represents amounts receivable for services net of Value Added Tax and is derived from the Group's principal activity. Turnover from the supply of services represents the value of services provided under contracts to the extent that there is a right to consideration and is recorded at the value of the consideration.
Where the amount of turnover is contingent on future events, this is only recognised where the amount of revenue can be measured reliably and it is probable that the economic benefits will be received. When this cannot be estimated reliably, revenue is only recognised to the extent of the expenses recognised that are recoverable, with an additional element of revenue recognised based on stage of completion once the uncertain events no longer exist.
Services provided to the client which at the balance sheet date have not been billed have been recognised as revenue and are included in debtors as accrued income. Where payments are received from customers in advance of services provided, the amounts are recorded as deferred income and included as part of creditors due within one year.
Cost of sales represents direct costs attributable to turnover, recorded on an accruals basis.
Rentals payable under operating leases are charged against income on a straight-line basis over the lease term.
Current tax, including United Kingdom corporation tax, is provided at amounts expected to be paid (or recovered) using the tax rates and laws that have been enacted or substantively enacted at the balance sheet date.
Deferred tax is provided in full on timing differences which result in an obligation at the balance sheet date to pay more tax, or a right to pay less tax, at a future date, at rates expected to apply when they crystallise based on current tax rates and law. Timing differences arise from the inclusion of items of income and expenditure in taxation computations in periods different from those in which they are included in the financial statements.
A net deferred tax asset is regarded as recoverable and therefore recognised only to the extent that, on the basis of all available evidence, it can be regarded as more likely than not that there will be suitable tax profits from which the future reversal of the underlying timing differences can be deducted. Deferred tax assets and liabilities are not discounted.
The pension costs charged in the financial statements represent the defined contributions payable by the Group during the period on an accruals basis.
|
FERNLAKES LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 29 DECEMBER 2023
1.Accounting policies (continued)
Transactions denominated in foreign currencies are translated into pound sterling at the rate of exchange ruling at the date of the transaction. Monetary assets and liabilities denominated in foreign currencies are translated into sterling at the rate of exchange ruling at the balance sheet date. Exchange differences are taken to the consolidated Profit and Loss Account.
All borrowing costs are recognised in the Consolidated Profit and Loss Account in the year in which they are incurred.
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Intangible assets - website development costs
|
Website development costs are recorded at cost less accumulated amortisation. Website development costs are amortised to the Consolidated Profit and Loss Account over a 3 year period, being their estimated useful lives.
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Intangible assets - acquired rights
|
Where the rights to future film receipts are acquired from ordinary members in film partnerships, an intangible asset arises representing the value of payments owing to those members. The intangible asset is amortised to the consolidated Profit and Loss Account on a systematic basis to match against the income generated by the acquisition.
Tangible fixed assets are stated at cost, net of depreciation and any provision for impairment.
Depreciation is provided at the following annual rates in order to write off each asset over its estimated useful life:
Short leasehold land and buildings In equal instalments over the remaining period of the lease
Fixtures, fittings and equipment 10% - 33% of cost
Other investments and loans
Where fair value cannot be reliably measured, other investments are stated at cost less any provision for permanent diminution in value. Refer to note 1.17 for policies on impairment of certain investments.
Loans are held at amortised cost using the effective interest rate method, except those that are classified as non basic as defined in FRS102 Section 12 and are therefore accounted for at fair value through profit or loss.
Trade loans entered into are recorded at the full extent of their legal liability at the date that the loan agreement was signed, less any repayments to date.
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FERNLAKES LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 29 DECEMBER 2023
1.Accounting policies (continued)
Interest-bearing bank loans and overdrafts are recorded at the proceeds received, net of direct issue costs. Finance charges are accounted for on an accruals basis in the Profit and Loss Account using the effective interest method and are added to the carrying amount of the instrument to the extent that they are not settled in the period in which they arise.
The Group enters into basic and non basic financial instrument transactions that result in the recognition of financial assets and liabilities like trade and other debtors and creditors, loans from banks and other third parties, loans to related parties and investments in non-puttable ordinary shares.
Debt instruments (other than those wholly repayable or receivable within one year), including loans and other accounts receivable and payable, are initially measured at present value of the future cash flows and subsequently at amortised cost using the effective interest method, except those that are designated at fair value to avoid an accounting mismatch. Debt instruments that are payable or receivable within one year, typically trade debtors and creditors, are measured, initially and subsequently, at the undiscounted amount of the cash or other consideration expected to be paid or received. However, if the arrangements of a short-term instrument constitute a financing transaction, like the payment of a trade debt deferred beyond normal business terms or financed at a rate of interest that is not a market rate or in the case of an out-right short-term loan not at market rate, the financial asset or liability is measured, initially, at the present value of the future cash flow discounted at a market rate of interest for a similar debt instrument and subsequently at amortised cost.
Financial assets that are measured at cost and amortised cost are assessed at the end of each reporting period for objective evidence of impairment. If objective evidence of impairment is found, an impairment loss is recognised in the Consolidated Profit and Loss Account.
For financial assets measured at amortised cost, the impairment loss is measured as the difference between an asset's carrying amount and the present value of estimated future cash flows discounted at the asset's original effective interest rate. If a financial asset has a variable interest rate, the discount rate for measuring any impairment loss is the current effective interest rate determined under the contract.
For financial assets measured at cost less impairment, the impairment loss is measured as the difference between an asset's carrying amount and best estimate of the recoverable amount, which is an approximation of the amount that the Group would receive for the asset if it were to be sold at the balance sheet date.
Financial liabilities that do not have fixed repayment terms are classified as non basic financial instruments and are therefore held at fair value through profit or loss. Where their value is dependent on the value of a corresponding financial asset, the financial asset is also classified at fair value to avoid an accounting mismatch.
Financial assets and liabilities are offset and the net amount reported in the Balance Sheet when there is an 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.
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FERNLAKES LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 29 DECEMBER 2023
1.Accounting policies (continued)
Financial liabilities and equity are classified according to the substance of the financial instrument's contractual obligations, rather than the financial instrument's legal form.
Financial liabilities that are non basic are initially classified as financial liabilities at fair value through profit or loss.
The Group determines the classification of its financial liabilities at initial recognition. All financial liabilities are recognised initially at fair value and in the case of loans and borrowings, plus directly attributable transaction costs.
Subsequently, the measurement of financial liabilities depends on their classification under FRS102.
Basic financial liabilities are measured at amortised cost, and non basic financial liabilities are valued at fair value through profit or loss.
Interest bearing loans and borrowings
Obligations for loans and borrowings are recognised when the Group becomes party to the related contracts and are measured initially at the fair value of consideration received less directly attributable transaction costs.
After initial recognition, interest bearing loans and borrowings are subsequently measured at amortised cost using the effective interest method.
Gains and losses arising on the repurchase, settlement or otherwise cancellation of liabilities are recognised respectively in finance income and finance cost.
Derecognition of financial liabilities
A liability is derecognised when the contract that gives rise to it is settled, sold, cancelled or expired.
Where an existing financial liability is replaced by another from the same lender on substantially different terms, or the terms of an existing liability are substantially modified, such as an exchange or modification, this is treated as a derecognition of the original liability, such that the difference in the respective carrying amounts together with any costs or fees incurred are recognised in profit or loss.
In accordance with FRS 102 Section 20 Leases, the amount due from the lessee under finance leases is recorded in the Balance Sheet as a debtor at the amount of the net investment in the lease, less provision for any items such as bad and doubtful rentals receivable.
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FERNLAKES LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 29 DECEMBER 2023
1.Accounting policies (continued)
Provisions are recognised when the Group has a present obligation (legal or constructive) as a result of a past event, it is probable that the Group will be required to settle that obligation and a reliable estimate can be made of the amount of the obligation.
The amount recognised as a provision is the best estimate of the consideration required to settle the present obligation at the balance sheet date, taking into account the risks and uncertainties surrounding the obligation. Where a provision is measured using the cash flows estimated to settle the present obligation, its carrying amount is the present value of those cash flows.
When some or all of the economic benefits required to settle a provision are expected to be recovered from a third party, a receivable is recognised as an asset if it is virtually certain that reimbursement will be received and the amount of the receivable can be measured reliably.
The merger reserve was created due to a reorganisation of the Group in a previous period. The Group reorganisation was accounted for using merger accounting principles in order to meet the overriding requirement under section 611 of the Companies Act 2006 for financial statements to present a true and fair view.
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Other operating income/(expense)
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Other operating income/(expense) include charges for investments and other assets impaired during the period. Other operating income includes, inter alia, the gain on sale of investments.
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Change in Application of Transfer Pricing Policy
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The Company entered into an agreement in February 2022 to sub-let it's office space to new tenants. A decision was made in the current financial year to transfer the benefit of the sub-lease rental income from the Company to Freeshire Limited, it's immediate subsidiary. The recharge of rental expense accounted for in the year has been retrospectively applied from the start of the lease period, constituting a change in the application of the transfer pricing policy.
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FERNLAKES LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 29 DECEMBER 2023
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Judgements in applying accounting policies and key sources of estimation uncertainty
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In the application of the Group's and Company's accounting policies, which are described in note 1, the Directors are required to make judgements, estimates and assumptions about the carrying amounts 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 year in which the estimate is revised if the revision affects only that year, or in the year of the revision and future years if the revision affects both current and future years.
Critical accounting judgements in applying the accounting policies
The following are the critical judgements that the Directors have made in the process of applying the accounting policies and that have the most significant effect on the amounts recognised in the financial statements.
Aside from that noted below, there are no other key sources of estimation uncertainty in the Group.
Impairment of financial and non-financial assets
Assets, other than those measured at fair value, are assessed for indicators of impairment at each balance sheet date. If there is objective evidence of impairment, an impairment loss is recognised in profit or loss as described below.
Non-financial assets
An asset is impaired where there is objective evidence that, as a result of one or more events that occurred after initial recognition, the estimated recoverable value of the asset has been reduced. The recoverable amount of an asset is the higher of its fair value less costs to sell and its value in use. Where indicators exist for a decrease in impairment loss, the prior impairment loss is tested to determine reversal. An impairment loss is reversed on an individual impaired asset to the extent that the revised recoverable value does not lead to a revised carrying amount higher than the carrying value had no impairment been recognised.
Financial assets
For financial assets carried at amortised cost, the amount of an impairment is the difference between the asset's carrying amount and the present value of the estimated future cash flows, discounted at the financial asset's original effective interest rate. For financial assets carried at cost less impairment, the impairment loss is the difference between the asset's carrying amount and the best estimate of the amount that would be received for the asset if it were to be sold at the reporting date.
Where indicators exist for a decrease in impairment loss, and the decrease can be related objectively to an event occurring after the impairment was recognised, the prior impairment loss is tested to determine reversal. An impairment loss is reversed on an individual impaired financial asset to the extent that the revised recoverable value does not lead to a revised carrying amount higher than the carrying value had no impairment have been recognised.
After making this assessment, an impairment loss of £15k relating to trade loans has been recognised in the profit and loss account in the financial year. No other non financial or financial assets have been impaired in the year.
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FERNLAKES LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 29 DECEMBER 2023
Tax liability
In estimating the potential tax liability relating to the First-tier Tax Tribunal, the Upper Tribunal and Court of Appeal decisions (refer to note 9), the following key elements as set out in the Tribunal decision were taken into account in calculating the partnerships’ revised profits or losses: treatment of the operator and executive producer fees, deductibility of contracted film cost, recognition of film income and the calculation of the film net realisable values. These reduce the income and expenditure recognised by the partnerships which reduces the losses available to be utilised by the Group.
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The directors have restated the prior year financial statements to correctly account for loan interest payable to Ingenious Capital Management Holdings Limited.
The prior period loss and creditors was increased by £273k, which reflects a correction in the profit and loss account for loan interest payable and other creditors on the balance sheet.
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Loss for the financial year
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Prior year adjustment of loan interest payable
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Prior year adjustment of loan interest payable
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Prior year adjustment of other creditors
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The total turnover of the Group for the year has been predominantly derived from its principal activity (refer to page 1).
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FERNLAKES LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 29 DECEMBER 2023
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The operating loss is stated after charging/ (crediting):
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Fair value adjustment of fixed asset investments (see note 11)
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Amortisation of intangible assets (see note 12)
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Depreciation of tangible fixed assets (see note 13)
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Operating lease rentals - land and buildings
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Other operating income/ expense:
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Fees payable to the Company's auditor for the audit of the Company's
annual financial statements
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Fees payable to the Group's auditor for the audit of the Group's
subsidiaries pursuant to legislation
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Fees payable to the Company's auditor for other assurance services
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The average monthly number of employees (excluding Directors) during the year ended 29 December 2023 was nil (2022: nil).
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The highest paid Director received remuneration of £nil (2022 - £nil).
See also Directors' current accounts in note 24.
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FERNLAKES LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 29 DECEMBER 2023
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Interest receivable and similar income
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Other interest receivable
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Interest payable and similar expenses
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Interest payable on shareholder loan (note 17)
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UK Corporation tax credit/(charge)
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Adjustments in respect of prior years
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Deferred tax (credit)/charge for the year
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Deferred tax adjustment in respect of prior years
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Change in tax rate movement charge
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Taxation on profit on ordinary activities
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FERNLAKES LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 29 DECEMBER 2023
10.Taxation (continued)
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Factors affecting tax charge for the year
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The tax assessed for the year is lower than (2022: higher than) the blended rate* of corporation tax in the UK of 23.49% (2022: 19%). The differences are explained below:
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Profit/(loss) on ordinary activities before tax
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Profit/(loss) on ordinary activities multiplied by the blended rate* of corporation tax in the UK of 23.49% (2022 - 19%)
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Adjustments resulting from investment in film partnerships
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Adjustments in respect of investment in associated LLPs
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Expenses not deductible for tax purposes
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Transfer pricing adjustment
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Other short-term timing differences
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Income of consolidated partnerships taxable on members
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Adjustments in respect of prior years
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Impact of CT rate difference (2021: CT at 19% vs DT at 25%)
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Unrecognised tax losses carried forward
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Utilisation of tax losses carried forward
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Timing differences in relation to capital allowances
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Total tax charge for the year
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Factors that may affect future tax charges
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* The main rate of corporation tax increased from 19% to 25% from 1 April 2023. As this accounting period straddles the change of tax rate, a blended rate of 23.49% has been calculated being 19% for the period 30 December 2022 to 31 March 2023 and then 25% from 1 April 2023 to 29 December 2023.
A potential deferred tax asset of £2.0m (2022: £2.1m) in respect of tax losses carried forward has not been recognised due to uncertainty over the availability of taxable profits in future chargeable accounting periods.
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FERNLAKES LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 29 DECEMBER 2023
In prior accounting periods, the Group has received the benefit of tax losses associated with the Group's investment in a number of film and game production partnerships. The Group has challenged the basis on which the closure notices of the partnerships have been calculated, resulting in a hearing before the First-tier Tribunal Tax (“the Tribunal”). The initial decision of the Tribunal was delivered on 2 August 2016, a second decision which clarified the findings of the first decision was delivered in May 2017 and an amended decision was received on 16 November 2017. The effect of the decisions is to reduce both the losses available to Group entities that invested in the film and game production partnerships and their share of taxable income from the partnerships. The partnerships received permission to appeal in full on 7 of the 8 grounds requested from the Tribunal and on all aspects of the 8th ground the Upper Tribunal was asked to consider. The appeal hearing before the Upper Tribunal was heard in March and April 2019. On 26 July 2019 the film and game production partnerships received the decision of the Upper Tribunal on their appeals against the decision of the First-tier Tax Tribunal. The Upper Tribunal concluded that the partnerships were not trading and did not have a view to profit. The finding that the partnerships were not trading is sufficient to dispose of the entirety of the partnerships' appeals. However, mindful that the decision may itself be appealed, the Upper Tribunal went on to briefly consider the remaining questions, where it often corrected the First-tier Tribunal's approach but generally supported the First-tier Tribunal's overall conclusions. An application for permission to appeal the Upper Tribunal's decision was submitted in November 2019 and was refused by the Upper Tribunal. An application was therefore made for permission to appeal to the Court of Appeal in December 2019 and authority was granted by the Court of Appeal in February 2020 to appeal the findings on trading and view to profit. The appeal hearing before the Court of Appeal was heard in March 2021 and resulted in the partnerships winning on both trading and view to profit issues.
During the process of agreeing the film partnership profits and losses subject to corporation tax with HMRC following the Court of Appeal decision in 2021, it has become apparent that HMRC have a different interpretation to the Group on one aspect of the First-tier Tribunal decision. The Group understands that the partnership asset created by the film expenditure and described by the First-tier tribunal as an intangible fixed asset should qualify for relief under Part 8 CTA 2009. HMRC consider that the asset is precluded from qualifying for relief under Part 8 CTA 2009 because it constitutes a financial asset. A referral back to the First-tier Tribunal took place in September 2024 to resolve this issue. The outcome of the First-tier Tribunal is currently outstanding at the date of signing these accounts. If the group is correct the impact on the financial statements for the group of the Court of Appeal decision has not yet been agreed with HMRC but is expected to be consistent with the Directors' estimate of the additional tax and interest liability calculated on the basis of the decision of the First-tier Tax Tribunal. If HMRC are correct, an additional tax liability of c.£13m arising from the withdrawal of losses, plus interest on late paid tax, would arise for the Group in addition to the estimate of the liability arising from the First-tier Tax Tribunal decision of £18.8m. As at 29 December 2023, payments totaling £13.8m (tax) and £6.1m (interest) had been made with regard to these amounts, as described further below.
The quantum of both tax losses available to the Group and income taxable on Group entities arising from the Group's investment in these partnerships will remain uncertain until the tax cases are finally resolved. For the year ended 29 December 2023, the Directors have estimated an additional tax liability for the group of £23k (cumulative to 2022: £18,831k) together with a liability for late paid interest of £695k (cumulative to 2022: £13,623k) based on the current Tribunal decision. The Directors' estimate of the additional tax and interest liability continues to be calculated on the basis of the decision of the First-tier Tax Tribunal as the Directors consider that this decision provides the most likely outcome to the litigation.
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FERNLAKES LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 29 DECEMBER 2023
During November 2016, a number of companies, all subsidiaries of Fernlakes Limited, as corporate members of film production partnerships received Partner Payment Notices (“PPNs”), which are demands for payments on account in respect of a tax liability in dispute, from HMRC. The group made payments totaling £13.8m to HMRC in February 2018 together with an associated interest charge on late paid tax of £6.1m to HMRC in April 2018. If HMRC issues determinations in respect of representations submitted by other Members against PPNs, a further payment of £6.5m will be due to HMRC by the group together with an associated interest charge. These payments on account (£13.8m) may be repaid so are shown as debtors (note 14) with the gross amount of total taxes provided included in creditors (note 16). When determining the best estimate of the ultimate cash outflows, the Directors have considered the effect of the PPNs received but believe that the best estimate of ultimate cash outflows should still be based on the decision delivered by the First-tier Tax Tribunal as this represents the most likely outcome to the litigation.
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Fair value adjustment through profit or loss
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During the year the Group had a 15% (2022: 15%) holding in the ordinary shares of Protagonist Pictures Limited ("PPL"), an integrated film business.
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During the year the Group had interests in the following significant investments:
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Net assets / liabilities at latest financial year end
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Profit / (loss) at latest financial year end
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FERNLAKES LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 29 DECEMBER 2023
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Ingenious Fuller Partnership LLP
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Management do not consider any of these to be subsidiaries, associates or joint ventures, as defined in FRS102, as the Group has no control or significant influence over the operating and financial policies.
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The following were subsidiary undertakings of the Company:
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Amber Film Partner 1 Limited
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Aries Film Partner 1 Limited
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Aries Film Partner 2 Limited
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Barnsdale Hills Limited **
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Bergkamp Productions Limited
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Big Screen Productions 10 Limited *
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Big Screen Productions 11 Limited *
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Big Screen Productions 12 Limited *
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Big Screen Productions 13 Limited *
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FERNLAKES LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 29 DECEMBER 2023
Subsidiary undertakings (continued)
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Big Screen Productions 14 IM Limited *
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Big Screen Productions 15 IM Limited *
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Big Screen Productions 16 IM Limited *
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Big Screen Productions 17 IM Limited *
|
|
|
|
Big Screen Productions 18 IM Limited *
|
|
|
|
Big Screen Productions 19 IM Limited *
|
|
|
|
Big Screen Productions 2 Limited *
|
|
|
|
Big Screen Productions 20 IM Limited *
|
|
|
|
Big Screen Productions 21 IM Limited *
|
|
|
|
Big Screen Productions 22 IM Limited *
|
|
|
|
Big Screen Productions 23 IM Limited *
|
|
|
|
Big Screen Productions 24 IM Limited *
|
|
|
|
Big Screen Productions 3 Limited *
|
|
|
|
Big Screen Productions 4 Limited *
|
|
|
|
Big Screen Productions 5 Limited *
|
|
|
|
Big Screen Productions 7 Limited *
|
|
|
|
Big Screen Productions 8 Limited *
|
|
|
|
Big Screen Productions 9 Limited *
|
|
|
|
Bronze Film Partner 1 Limited
|
|
|
|
Bronze Film Partner 2 Limited
|
|
|
|
Bullock Street Waste Energy Limited *
|
|
|
|
|
|
|
|
Cairo Film Partner 1 Limited
|
|
|
|
Cairo Film Partner 2 Limited
|
|
|
|
|
|
|
|
Chrome Film Partner 1 Limited
|
|
|
|
Chrome Film Partner 2 Limited
|
|
|
|
Copper Film Partner 1 Limited
|
|
|
|
Copper Film Partner 2 Limited
|
|
|
|
Corinth Film Partner 1 Limited
|
|
|
|
Corinth Film Partner 2 Limited
|
|
|
|
|
|
|
|
|
|
|
|
Dayday Films (CM) Limited *
|
|
|
|
Daylily Investments Limited *
|
|
|
|
Delphi Film Partner 1 Limited
|
|
|
|
Delphi Film Partner 2 Limited
|
|
|
|
Ebony Film Partner 1 Limited
|
|
|
|
Ebony Film Partner 2 Limited
|
|
|
|
Electra Film Partner 1 Limited
|
|
|
|
Electra Film Partner 2 Limited
|
|
|
|
|
|
|
|
|
|
|
|
Fleet Film Partners 1 Limited
|
|
|
|
Fleet Film Partners 2 Limited
|
|
|
|
Gemini Film Partner 1 Limited
|
|
|
|
Gemini Film Partner 2 Limited
|
|
|
|
Gemstone Film Partner 1 Limited
|
|
|
|
Gemstone Film Partner 2 Limited
|
|
|
|
|
|
|
|
|
|
|
|
FERNLAKES LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 29 DECEMBER 2023
Subsidiary undertakings (continued)
|
Ingenious (Jersey) Film Sales Limited
|
|
|
|
Golden Square Services 1 Limited
|
|
|
|
Golden Square Services 2 Limited
|
|
|
|
|
|
|
|
Granleaf Square Limited **
|
|
|
|
|
|
|
|
|
|
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|
|
|
|
|
|
|
|
Howells Productions Limited
|
|
|
|
IFP1 Corporate Partner Limited
|
|
|
|
IFP2 Corporate Partner Limited
|
|
|
|
Inkie Productions IM Limited **
|
|
|
|
Ivory Film Partner 1 Limited
|
|
|
|
Ivory Film Partner 2 Limited
|
|
|
|
Jade Film Partner 1 Limited
|
|
|
|
Jade Film Partner 2 Limited
|
|
|
|
Jasper Film Partner 1 Limited
|
|
|
|
Jasper Film Partner 2 Limited
|
|
|
|
Jewel Film Partner 1 Limited
|
|
|
|
Jewel Film Partner 2 Limited
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Leo Film Partner 1 Limited
|
|
|
|
Leo Film Partner 2 Limited
|
|
|
|
Libra Film Partner 1 Limited
|
|
|
|
Libra Film Partner 2 Limited
|
|
|
|
Little Blair Productions IM Limited *
|
|
|
|
Lodestone Film Partner 1 Limited
|
|
|
|
Lodestone Film Partner 2 Limited
|
|
|
|
Luxor Film Partner 1 Limited
|
|
|
|
Luxor Film Partner 2 Limited
|
|
|
|
Malachite Film Partner 1 Limited
|
|
|
|
Malachite Film Partner 2 Limited
|
|
|
|
Mars Film Partner 1 Limited
|
|
|
|
Mars Film Partner 2 Limited
|
|
|
|
|
|
|
|
Mercury Film Productions Limited
|
|
|
|
Milan Film Partner 1 Limited
|
|
|
|
Milan Film Partner 2 Limited
|
|
|
|
Millbank Broadcasting Partner 1 Limited
|
|
|
|
Millbank Broadcasting Partner 2 Limited
|
|
|
|
|
|
|
|
Neptune Film Partner 1 Limited
|
|
|
|
Neptune Film Partner 2 Limited
|
|
|
|
Opal Film Partners 1 Limited
|
|
|
|
Opal Film Partners 2 Limited
|
|
|
|
Pangorda Investor Limited *
|
|
|
|
Petra Film Partner 1 Limited
|
|
|
|
Petra Film Partner 2 Limited
|
|
|
|
FERNLAKES LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 29 DECEMBER 2023
Subsidiary undertakings (continued)
|
Phoenix Film Partners Limited *
|
|
|
|
Quartz Film Partner 1 Limited
|
|
|
|
Quartz Film Partner 2 Limited
|
|
|
|
Rome Film Partner 1 Limited
|
|
|
|
Rome Film Partner 2 Limited
|
|
|
|
Sapphire Film Partner 1 Limited
|
|
|
|
Sapphire Film Partner 2 Limited
|
|
|
|
Saturn Film Partner 1 Limited
|
|
|
|
Saturn Film Partner 2 Limited
|
|
|
|
|
|
|
|
Sirius Film Partner 1 Limited
|
|
|
|
Sirius Film Partner 2 Limited
|
|
|
|
Skull Distribution Limited
|
|
|
|
Solar Film Partners IM Limited *
|
|
|
|
Starlight Film Partners Limited *
|
|
|
|
Taurus Film Partner 1 Limited
|
|
|
|
Taurus Film Partner 2 Limited
|
|
|
|
|
|
|
|
Topaz Film Partner 1 Limited
|
|
|
|
Topaz Film Partner 2 Limited
|
|
|
|
Trafalgar Film Partner 1 Limited
|
|
|
|
Trafalgar Film Partner 2 Limited
|
|
|
|
Trieste Film Partner 1 Limited
|
|
|
|
Trieste Film Partner 2 Limited
|
|
|
|
Turin Film Partner 1 Limited
|
|
|
|
Turin Film Partner 2 Limited
|
|
|
|
Venus Film Partner 1 Limited
|
|
|
|
Verona Film Partner 1 Limited
|
|
|
|
Verona Film Partner 2 Limited
|
|
|
|
Vienna Film Partner 1 Limited
|
|
|
|
Vienna Film Partner 2 Limited
|
|
|
|
Virgo Film Partner 1 Limited
|
|
|
|
Virgo Film Partner 2 Limited
|
|
|
|
Waterloo Film Partner 1 Limited
|
|
|
|
Waterloo Film Partner 2 Limited
|
|
|
|
|
|
|
|
Zinc Film Partner 1 Limited
|
|
|
|
Zinc Film Partner 2 Limited
|
|
|
|
* = In Liquidation
** = In Administration
|
|
FERNLAKES LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 29 DECEMBER 2023
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Charge for the year on owned assets
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
FERNLAKES LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 29 DECEMBER 2023
12.Intangible assets (continued)
|
Development costs
Costs related to the development of a new website and internal client relationship management (CRM) system have been capitalised in accordance with the requirements of FRS 102.
Acquired rights
On 5 April 2008 Langreave Limited (previously known as Ingenious Film Partners Limited) acquired the right to receive future film receipts above an agreed level from the ordinary members of the Ingenious Film Partners LLP. On 22 November 2010, IFP1 Corporate Partner Limited became entitled to a portion of these film receipts, as detailed in the members' agreement.
On 5 April 2008 Cradgrove Limited (previously known as Ingenious Film Partners 2 Limited) acquired the right to receive future film receipts above an agreed level from the ordinary members of the Ingenious Film Partners 2 LLP. On 22 November 2010, IFP2 Corporate Partner Limited became entitled to a portion of these film receipts, as detailed in the members' agreement.
During the financial year, IFP1 Corporate Partner Limited and IFP2 Corporate Partner Limited were entitled to film receipts totaling £4,984k, of which £145k was payable to the ordinary members. The amount payable to the ordinary members was capitalised as an intangible asset and amortised as a charge to the Profit and Loss Account to offset the income that the asset has generated. No further film receipts were payable in 2022.
The above amortisation charge of £145k (2022: £74k) is included within administrative expenses in the Consolidated Profit and Loss Account.
|
|
FERNLAKES LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 29 DECEMBER 2023
|
|
Short-term leasehold property
|
Fixtures, fittings and equipment
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Charge for the year on owned assets
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
FERNLAKES LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 29 DECEMBER 2023
13.Tangible fixed assets (continued)
|
|
Short-term leasehold property
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Charge for the year on owned assets
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The net book value of land and buildings may be further analysed as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Short-term leasehold property
|
|
|
|
|
|
|
|
|
|
|
|
FERNLAKES LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 29 DECEMBER 2023
|
Due after more than one year
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Director's current account
|
|
|
|
|
|
|
|
|
|
|
|
Prepayments and accrued income
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Trade loans (due after more than one year) are represented by amounts lent to Ingenious Real Estate Enterprises 4 Limited.
Trade loans are shown net of provisions of £38,465k.
Other debtors represent the amounts receivable from the Ingenious Capital Management Holdings Limited group of companies.
|
|
Cash and cash equivalents
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
FERNLAKES LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 29 DECEMBER 2023
|
|
|
|
|
|
|
Amounts owed to Group undertakings
|
|
|
|
|
|
Directors' current account
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accruals and deferred income
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Creditors: Amounts falling due after more than one year
|
|
|
|
|
|
|
|
|
|
|
|
|
In May 2022 the Group’s ultimate beneficial shareholder, P A McKenna, provided a combined £14,198k general purpose loan facility to two Group subsidiaries. The combined loan is repayable from drawings from the film partnerships. Interest of 5% above base rate accrues on the loan facility, £1,665k combined interest is repayable as at 29 December 2023.
When the film partnerships sells its film rights, any drawings from the film partnerships (less Ordinary member payments and tax) shall be applied in repayment of the loan facilities (a "Final Repayment"). On the date of the Final Repayment, the two Group subsidiaries shall pay any remaining accrued interest on their loan facility, provided drawings received by the Group from the film partnerships are sufficient to enable such payments to be made.
|
FERNLAKES LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 29 DECEMBER 2023
|
|
|
Please refer to Financial instruments and risk management in the Strategic Report for further details on the impact of liquidity, interest rate and credit risk to the Group.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Measured at undiscounted amount receivable
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Measured at undiscounted amount payable
|
|
|
|
|
|
|
|
|
|
|
|
Other creditors (due within one year)
|
|
|
|
|
|
Measured at amortised cost
|
|
|
|
|
|
Other loans due after more than one year
|
|
|
|
|
|
FERNLAKES LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 29 DECEMBER 2023
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Charged to profit or loss
|
|
|
|
|
|
|
|
|
|
Interest provision
Interest provision relates to interest on the estimated tax liability (refer to notes 2 and 9).
Other provisions
The Group charged £17k to the profit and loss in the year in relation to litigation costs, with the full amount being utilised in April 2024.
|
|
FERNLAKES LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 29 DECEMBER 2023
|
Allotted, called up and fully paid
|
|
|
|
Class 'A' shares of 10p each
|
|
|
|
Class 'B' shares of 5p each
|
|
|
|
Class 'C' shares of 5p each
|
|
|
|
Class 'D' shares of 5p each
|
|
|
|
Class 'E' shares of 5p each
|
|
|
|
Class 'F' shares of 5p each
|
|
|
|
Class 'G' shares of 5p each
|
|
|
|
Class 'H' shares of 5p each
|
|
|
|
Class 'I' shares of 5p each
|
|
|
|
Class 'J' shares of 5p each
|
|
|
|
Class 'K' shares of 5p each
|
|
|
|
Class 'L' shares of 0.125p each
|
|
|
|
Class 'M' shares of 0.125p each
|
|
|
|
Class 'N' shares of 0.125p each
|
|
|
|
Class 'O' shares of 0.125p each
|
|
|
|
Class 'P' shares of 0.125p each
|
|
|
|
Class 'Q' shares of 0.125p each
|
|
|
|
Class 'R' shares of 0.125p each
|
|
|
|
Class 'S' shares of 0.125p each
|
|
|
|
Class 'T' shares of 0.125p each
|
|
|
|
Class 'U' shares of 0.125p each
|
|
|
|
Class 'V' shares of 0.125p each
|
|
|
|
Class 'W' shares of 0.125p each
|
|
|
|
Class 'X' shares of 0.125p each
|
|
|
|
Class 'Y' shares of 0.125p each
|
|
|
|
Class 'Z' shares of 0.125p each
|
|
|
|
|
|
|
|
FERNLAKES LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 29 DECEMBER 2023
|
|
Called up share capital (continued)
|
Class 'A' shares hold all voting rights and entitlements to distributions of retained profit.
Shares of 5p each of classes 'B' through 'K' acquired by employees are held in trust by Gildales Limited (previously known as Ingenious Nominees Limited) and/or Barry Nominees Limited on behalf of the named employees.
Shares of 0.125p each of classes 'L' through 'Z' acquired by employees are held in trust by Gildales Limited and/or Barry Nominees Limited on behalf of named employees. The shares do not carry voting rights or entitlements to dividends, but entitle the owner to a share of the proceeds on sale or public listing of the Company. Finance costs relating to the scheme are borne by Freeshire Limited. Employees can be made to surrender their shares if they cease to be employees of the Group.
|
See note 1.21 for further information on the merger reserve.
|
|
|
|
Financial commitments are as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Contracted for but not provided for
|
|
|
|
- operating leases entered into
|
|
|
|
- potential amounts owed to legacy investors
|
|
|
|
|
|
|
|
Potential amounts owed to legacy investors represents the total repayment of limited recourse loans that could be redrawn if certain conditions are met. The Company estimates that its maximum settlement value is £9,634k (2022: £9,627k) as at the financial reporting date.
|
|
FERNLAKES LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 29 DECEMBER 2023
|
Minimum future lease payments under non-cancelable operating leases are as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Between one and five years
|
|
|
|
|
|
|
|
Related party transactions
|
|
The Company has taken advantage of the exemptions conferred by FRS 102 Section 33 Related Party Disclosures to not disclose intercompany transactions between 100% subsidiaries. During the year the Group conducted significant transactions with the following related parties outside of the Group:
|
|
|
Fee income derived from entities listed below
|
Fee income derived from entities listed below
|
Amounts due from/(to) entities listed below
|
Amounts due from/(to) entities listed below
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ingenious AG JV Member Limited
|
|
|
|
|
|
|
Ingenious Capital Management Limited
|
|
|
|
|
|
|
Ingenious Capital Management Holdings Limited
|
|
|
|
|
|
|
Ingenious Capital Management Services Limited
|
|
|
|
|
|
|
Ingenious Collections Limited
|
|
|
|
|
|
|
Ingenious IQB Member Limited
|
|
|
|
|
|
|
Ingenious Real Estate Enterprises 4 Limited
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Protagonist Pictures Limited
|
|
|
|
|
|
|
FERNLAKES LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 29 DECEMBER 2023
The Group had various trivial balances with entities listed in note 10.
The following significant relationships existed between the related parties during all or part of the year:
Subnote:
1 - Common Director(s).
2 - Common shareholder(s)/ultimate shareholder.
3 - Common Director(s) of designated member.
4 - Operator/promoter/administrator/advisor/manager/agent is Ingenious Capital Management Limited.
|
FERNLAKES LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 29 DECEMBER 2023
|
Directors' current account
|
|
Directors serving during the year had the following loan balances outstanding at the year end:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Directors' current accounts
|
|
|
|
Amount owed to / (from) the Group
|
|
|
During the year ended 29 December 2023 the ultimate controlling party of the Group and the Company was P A McKenna. The Company is the only parent undertaking for which consolidated financial statements are prepared.
In November 2022, an investor in Ingenious Film Partners LLP served a Claim Form on the Company and some of its subsidiaries, which were involved in the establishment and promotion of the partnership. In April 2024, the claimant and the Ingenious parties, including the Company, resolved their dispute on confidential terms.
|
Post balance sheet events
|
Tax litigation
A referral back to the First-tier Tribunal took place in September 2024 to resolve the remaining tax litigation. The outcome of the First-tier Tribunal is currently outstanding at the date of signing these accounts, see note 10 Taxation for further detail. If the Company is correct that the partnership asset created by the film expenditure and described by the First-tier Tribunal is an intangible fixed asset qualifying for tax relief, the impact on the financial statement for the Company is expected to be consistent with the Directors’ estimate of the additional tax and interest liability on the basis of the First-tier Tax Tribunal decision.
Film Rights sale
The Directors of the Group and senior management have successfully disposed the majority of its Film Rights in June 2024. Since then, senior management have started engaging with various third parties to sell the remaining Film Rights, which the Group is seeking to conclude within the next 12 months.
|
|