The CEO and Directors are pleased to present the strategic report for the year ended 31 March 2024.
Generation Media Enterprises Limited is continuing to develop strategic plans for the future of the Business which as always are reviewed every year.
Our key objectives are continuing to:
Maintain and extend our market-leading position as the world’s leading independent media specialist in audience first communication to Children, Families and Gamers.
Develop and support our customers' businesses specifically and generally to ensure that we maintain the highest and benchmarkable standards of professionalism and expertise.
Recruit and invest in key personnel to drive business growth and strengthen offering to clients.
Invest in systems and services (both developed internally and sourced externally) to increase and support our existing and new business growth in the online and traditional media sectors.
Be a market leader in the development of media planning and trading strategies in the rapidly changing and fragmenting children’s and youth digital space.
Continue to increase our market share in categories relevant to our specialism, notably Gaming, Content and Entertainment.
Continue to develop our brand in overseas markets, notably Germany, the United States and France.
Maintain and build upon our strong financial performance and continue to exceed profitability benchmarks versus competitive businesses.
The principal activity of the group is the provision of media trading and marketing services to advertisers in the Children, Families and Gamers’ marketing space.
The financial results for the year reflect the successful transition to an Employee Ownership Trust (EOT), demonstrating the resilience and stability of the business during this significant structural change. While profitability has been impacted by this transition, the company remains in a strong financial position, with performance aligning with forecasts and strategic expectations. Looking ahead, Generation Media Limited is poised for significant organic growth, driven by its commitment to innovation, expansion into key international markets, and continued investment in technology and talent.
Key performance indicators
During the year, the turnover saw a 4.4% increase to £51.1m (2023: £49.0m) and the gross profit margin remained consistent at 14.3% (2023: 15.6%).
EBITDA has decreased from £2.98m in 2023 to £0.60m in 2024.
Employees
As an employer, the group provides an effective and ongoing year-long training programme to ensure that all staff members are trained above and beyond the required standard. The group is proud to be an accredited Platinum CPD business awarded by our industry body, the IPA. Additionally, we are honoured to maintain our accredited Gold standard 'Investors in People', and 'Best Places to Work' awards from both the Sunday Times and Campaign Magazine.
Credit Risk
The group operates in a field where significant turnover is required to drive advantageous deals for our clients. Scale has always been and has further become increasingly important in the media trading space and whilst we operate in specific media sectors, sufficient scale is still required to leverage the necessary benefits our clients' investments deserve and expect. Like all agencies who are first party principals, we always run a risk of defaulted payments. Our credit control and finance management team is necessarily honed to the highest standards to ensure the group protects itself from such eventualities. In this regard we continually invest in group credit with a third party and tracking systems to assist in evaluating risk that the group may be exposed to. We also maintain a strong risk management policy and ensure our turnover is credit insured where possible to mitigate these risks.
Technical Risk
Investment in new technology is pivotal to maintaining our market leading position and ensuring we can compete successfully in the media planning and trading market of the future. The UK advertising arena is reported as the third highest spending globally, with the majority of this planned and bought via Digital platforms. Therefore, continuing to develop our approach to Digital Online adtech, and the increased usage of AI, to meet the needs of our UK customers will positively impact our growth plans for international advertising spend as global markets adjust to match the UK (and US market). The media buying world will become increasingly benchmarked and audited and the group will need to ensure its insurances and protections are updated and evaluated.
Managing the impact of potential inflation on the UK and global economy will continue to be a persistent and complex problem to navigate for our customers. Increased costs to the development, manufacturing and transportation of goods and services will increase pressure on advertising budgets to deliver return on investment.
The ongoing Digital transformation of the media marketplace means that the landscape will continue to be fragmented, both on a local and global level, making management of customer budgets become more demanding and difficult for customers to navigate. Therefore we be onboarding a new media planning and reporting system, to grant customers increased access to their marketing data in order to make more informed marketing investment decisions.
Given the current economic position within the UK and globally, persistent inflation poses a challenge for the media industry. Whilst the Bank of England (BoE) anticipates UK inflation to drop below targets in 2024, it is projected to rise to 3% in 2025. However, as uncertainties ease and interest rates decrease, the UK economy could gain growth momentum. This is expected to result in GDP growth reaching 1.2% by 2025. Consequently, we anticipate improved market conditions for both the UK & global entertainment and media sectors.
As reported by WARC, UK Advertising Spend is projected to increase +7.7% year-on-year by the end of 2024, and the Global Ad Spend Outlook for 2024/25 is projected to increase by +10.5% YoY. Many of our clients are international in their outlook and Generation Media will continue to evaluate current and new systems and processes in order to assist our customers in their cross market ambitions.
In our opinion, the economic environment will continue to evolve at a rapid pace in the long, medium and short terms. Like many businesses that are ambitious, we constantly monitor world events and their potential effects on local and international business whilst the world is entering a period of political uncertainty. We are well set to manage most eventualities: financially and in thought-leadership.
Overall, in the coming year (2024/25) we aim to grow revenues at a rate planned. We will continue to effectively develop our relationships with customers, supplier-partners and industry stakeholders in so doing, generating new business and increased wealth for our customers and of course our own business.
On behalf of the board
The directors present their annual report and financial statements for the year ended 31 March 2024.
The results for the year are set out on page 11.
No ordinary dividends were paid. The directors do not recommend payment of a further dividend.
The directors who held office during the year and up to the date of signature of the financial statements were as follows:
In accordance with the company's articles, a resolution proposing that Verallo be reappointed as auditor of the group will be put at a General Meeting.
The group has chosen in accordance with the Companies Act 2006, s. 414C(11) to set out in the group'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 future developments.
We have audited the financial statements of Generation Media Enterprises Limited (the 'parent company') and its subsidiaries (the 'group') for the year ended 31 March 2024 which comprise the group statement of comprehensive income, the group balance sheet, the company balance sheet, the group statement of changes in equity, the company statement of changes in equity, the group statement of cash flows and notes to the financial statements, including significant accounting policies. The financial reporting framework that has been applied in their preparation is applicable law and United Kingdom Accounting Standards, including 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 are independent of the group and parent company in accordance with the ethical requirements that are relevant to our audit of the financial statements in the UK, including the FRC’s Ethical Standard, and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
Conclusions relating to going concern
In auditing the financial statements, we have concluded that the directors' use of the going concern basis of accounting in the preparation of the financial statements is appropriate.
Based on the work we have performed, we have not identified any material uncertainties relating to events or conditions that, individually or collectively, may cast significant doubt on the group's and parent company’s ability to continue as a going concern for a period of at least twelve months from when the financial statements are authorised for issue.
Our responsibilities and the responsibilities of the directors with respect to going concern are described in the relevant sections of this report.
Other information
The other information comprises the information included in the annual report other than the financial statements and our auditor's report thereon. The directors are responsible for the other information contained within the annual report. Our opinion on the financial statements does not cover the other information and, except to the extent otherwise explicitly stated in our report, we do not express any form of assurance conclusion thereon. Our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the course of the audit, or otherwise appears to be materially misstated. If we identify such material inconsistencies or apparent material misstatements, we are required to determine whether this gives rise to a material misstatement in the financial statements themselves. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact.
We have nothing to report in this regard.
Opinions on other matters prescribed by the Companies Act 2006
In our opinion, based on the work undertaken in the course of our audit:
the information given in the strategic report and the directors' report for the financial year for which the financial statements are prepared is consistent with the financial statements; and
the strategic report and the directors' report have been prepared in accordance with applicable legal requirements.
In the light of the knowledge and understanding of the group and the parent company and their environment obtained in the course of the audit, we have not identified material misstatements in the strategic report or the directors' report. We have nothing to report in respect of the following matters in relation to which the Companies Act 2006 requires us to report to you if, in our opinion:
adequate accounting records have not been kept by the parent company, or returns adequate for our audit have not been received from branches not visited by us; or
the parent company financial statements are not in agreement with the accounting records and returns; or
certain disclosures of directors' remuneration specified by law are not made; or
we have not received all the information and explanations we require for our audit.
As explained more fully in the directors' responsibilities statement, the directors are responsible for the preparation of the financial statements and for being satisfied that they give a true and fair view, and for such internal control as the directors determine is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error. In preparing the financial statements, the directors are responsible for assessing the parent company's ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the directors either intend to liquidate the parent company or to cease operations, or have no realistic alternative but to do so.
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor's report that includes our opinion. Reasonable assurance is a high level of assurance but is not a guarantee that an audit conducted in accordance with ISAs (UK) will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements.
The extent to which our procedures are capable of detecting irregularities, including fraud, is detailed below.
Our approach was as follows:
We identified areas of laws and regulations that could reasonably be expected to have a material effect on the financial statements from our general commercial and sector experience, and through discussion with the directors and other management (as required by auditing standards), and discussed with the directors and other management the policies and procedures regarding compliance with laws and regulations;
We considered the legal and regulatory frameworks directly applicable to the financial statements reporting framework (FRS 102 and the Companies Act 2006) and the relevant tax compliance regulations in the UK;
We considered the nature of the industry, the control environment and business performance, including the key drivers for management’s remuneration;
We communicated identified laws and regulations throughout our team and remained alert to any indications of non-compliance throughout the audit;
We considered the procedures and controls that the companies have established to address risks identified, or that otherwise prevent, deter and detect fraud; and how senior management monitors those programmes and controls.
Based on this understanding we designed our audit procedures to identify non-compliance with such laws and regulations. Where the risk was considered to be higher, we performed audit procedures to address each identified fraud risk. These procedures included: testing manual journals; reviewing the financial statement disclosures and testing to supporting documentation; performing analytical procedures; and enquiring of management, and were designed to provide reasonable assurance that the financial statements were free from fraud or error.
Owing to the inherent limitations of an audit, there is an unavoidable risk that we may not have detected some material misstatements in the financial statements, even though we have properly planned and performed our audit in accordance with auditing standards. For example, the further removed non-compliance with laws and regulations (irregularities) is from the events and transactions reflected in the financial statements, the less likely the inherently limited procedures required by auditing standards would identify it. The risk is also greater regarding irregularities occurring due to fraud rather than error, as fraud involves intentional concealment, forgery, collusion, omission or misrepresentation. We are not responsible for preventing non-compliance and cannot be expected to detect non-compliance with all laws and regulations.
A further description of our responsibilities is available on the Financial Reporting Council’s website at: https://www.frc.org.uk/Our-Work/Audit/Audit-and-assurance/Standards-and-guidance/Standards-and-guidance-for-auditors/Auditors-responsibilities-for-audit/Description-of-auditors-responsibilities-for-audit.aspx. This description forms part of our auditor’s report.
Use of our report
This report is made solely to the company’s members, as a body, in accordance with Chapter 3 of Part 16 of the Companies Act 2006. Our audit work has been undertaken 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.
As permitted by s408 Companies Act 2006, the company has not presented its own profit and loss account and related notes. The company’s profit for the year was £8,442,600 (2023 - £385,000 profit).
The notes on pages 17 to 38 form part of these financial statements.
Generation Media Enterprises Limited (“the company”) is a private limited company domiciled and incorporated in England and Wales. The registered office is Century House, Wargrave Road, Henley-on-Thames, Oxfordshire, United Kingdom, RG9 2LT.
The group consists of Generation Media Enterprises Limited and all of its subsidiaries.
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.
The company is a qualifying entity for the purposes of FRS 102, being a member of a group where the parent of that group prepares publicly available consolidated financial statements, including this company, which are intended to give a true and fair view of the assets, liabilities, financial position and profit or loss of the group. The company has therefore taken advantage of exemptions from the following disclosure requirements for parent company information presented within the consolidated financial statements:
Section 7 ‘Statement of Cash Flows’: Presentation of a statement of cash flow and related notes and disclosures - no cash flow statement or net debt reconciliation has been presented for the parent company;
Section 11 ‘Basic Financial Instruments’ and Section 12 ‘Other Financial Instrument Issues: Interest income/expense and net gains/losses for financial instruments not measured at fair value; basis of determining fair values; details of collateral, loan defaults or breaches, details of hedges, hedging fair value changes recognised in profit or loss and in other comprehensive income;
Section 26 ‘Share based Payment’: Share-based payment expense charged to profit or loss, reconciliation of opening and closing number and weighted average exercise price of share options, how the fair value of options granted was measured, measurement and carrying amount of liabilities for cash-settled share-based payments, explanation of modifications to arrangements;
Section 33 ‘Related Party Disclosures’: Compensation for key management personnel. No disclosure has been given for the aggregate remuneration of the key management personnel of the parent company as their remuneration is included in the totals for the Group as a whole.
As permitted by s408 Companies Act 2006, the company has not presented its own profit and loss account and related notes. The company’s profit for the year was £8,442,600 (2023 - £385,000 profit).
The consolidated group financial statements consist of the financial statements of the parent company Generation Media Enterprises Limited together with all entities controlled by the parent company (its subsidiaries) and the group’s share of its interests in joint ventures and associates.
All financial statements are made up to 31 March 2024. Where necessary, adjustments are made to the financial statements of subsidiaries to bring the accounting policies used into line with those used by other members of the group.
All intra-group transactions, balances and unrealised gains on transactions between group companies are eliminated on consolidation. Unrealised losses are also eliminated unless the transaction provides evidence of an impairment of the asset transferred.
Subsidiaries are consolidated in the group’s financial statements from the date that control commences until the date that control ceases.
Purchase acquisition
The consolidated financial statements incorporate the results of business combinations using the purchase method. In the balance sheet, the acquiree's identifiable assets, liabilities and contingent liabilities are initially recognised at ther fair values at the acquisition date.
Merger accounting basis
The company acquired Generation Media Limited through a share-for-share exchange on 30 March 2022. There is no change to the ultimate ownership of Generation Media Limited and therefore in accordance with FRS 102 s 19, this is a group reconstruction and should therefore be accounted for in accordance with merger accounting. The following accounting treatments were applied in respect of the merger:
The assets and liabilities of Generation Media Limited were and continue to be recognised and measured in the consolidated financial statements without restatement to fair value.
The income, expenditure and cash flows of Generation Media Limited merged and are included within the consolidated financial statements as if they had always been part of the group.
The equity structure appearing in the consolidated financial statements reflected and continues to reflect the equity structure of the legal parent Generation Media Enterprises Limited.
The financial statements have been prepared on a going concern basis, which assumes the group will continue in operational existence, and will be able to meet its liabilities as they fall due, for a period of at least twelve months from the date of approval of the financial statements.
The directors have reviewed the continued impact of the economy on the operations and financial position of the group and have a reasonable expectation that the company has adequate resources to continue to adopt the going concern basis of accounting in preparing the financial statements.
Turnover represents amounts receivable for advertising and media services net of VAT and trade discounts.
Revenue from contracts for advertising and media services is recognised, as spent, over the life of the campaign.
The gain or loss arising on the disposal of an asset is determined as the difference between the sale proceeds and the carrying value of the asset, and is recognised in the profit and loss account.
Impairment of fixed assets
At each reporting period end date, the company reviews the carrying amounts of its tangible assets to determine whether there is any indication that those assets have suffered an impairment loss. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment loss (if any). Where it is not possible to estimate the recoverable amount of an individual asset, the company estimates the recoverable amount of the cash-generating unit to which the asset belongs.
Equity investments are measured at fair value through profit or loss, except for those equity investments that are not publicly traded and whose fair value cannot otherwise be measured reliably, which are recognised at cost less impairment until a reliable measure of fair value becomes available.
In the parent company financial statements, investments in subsidiaries, associates and jointly controlled entities are initially measured at cost and subsequently measured at cost less any accumulated impairment losses.
A subsidiary is an entity controlled by the group. Control is the power to govern the financial and operating policies of the entity so as to obtain benefits from its activities.
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 group considers that it has significant influence where it has the power to participate in the financial and operating decisions of the associate.
Investments in associates are initially recognised at the transaction price (including transaction costs) and are subsequently adjusted to reflect the group’s share of the profit or loss, other comprehensive income and equity of the associate using the equity method. Any difference between the cost of acquisition and the share of the fair value of the net identifiable assets of the associate on acquisition is recognised as goodwill. Any unamortised balance of goodwill is included in the carrying value of the investment in associates.
Losses in excess of the carrying amount of an investment in an associate are recorded as a provision only when the company has incurred legal or constructive obligations or has made payments on behalf of the associate.
In the parent company financial statements, investments in associates are accounted for at cost less impairment.
Entities in which the group has a long term interest and shares control under a contractual arrangement are classified as jointly controlled entities.
At each reporting period end date, the group reviews the carrying amounts of its tangible assets to determine whether there is any indication that those assets have suffered an impairment loss. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment loss (if any). Where it is not possible to estimate the recoverable amount of an individual asset, the company estimates the recoverable amount of the cash-generating unit to which the asset belongs.
The carrying amount of the investments accounted for using the equity method is tested for impairment as a single asset. Any goodwill included in the carrying amount of the investment is not tested separately for impairment.
Recoverable amount is the higher of fair value less costs to sell and value in use. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset for which the estimates of future cash flows have not been adjusted.
If the recoverable amount of an asset (or cash-generating unit) is estimated to be less than its carrying amount, the carrying amount of the asset (or cash-generating unit) is reduced to its recoverable amount. An impairment loss is recognised immediately in profit or loss, unless the relevant asset is carried at a revalued amount, in which case the impairment loss is treated as a revaluation decrease.
Recognised impairment losses are reversed if, and only if, the reasons for the impairment loss have ceased to apply. Where an impairment loss subsequently reverses, the carrying amount of the asset (or cash-generating unit) is increased to the revised estimate of its recoverable amount, but so that the increased carrying amount does not exceed the carrying amount that would have been determined had no impairment loss been recognised for the asset (or cash-generating unit) in prior years. A reversal of an impairment loss is recognised immediately in profit or loss, unless the relevant asset is carried at a revalued amount, in which case the reversal of the impairment loss is treated as a revaluation increase.
The group has elected to apply the provisions of Section 11 ‘Basic Financial Instruments’ and Section 12 ‘Other Financial Instruments Issues’ of FRS 102 to all of its financial instruments.
Financial instruments are recognised in the group's balance sheet when the group becomes party to the contractual provisions of the instrument.
Financial assets and liabilities are offset and the net amounts presented in the financial statements when there is a legally enforceable right to set off the recognised amounts and there is an intention to settle on a net basis or to realise the asset and settle the liability simultaneously.
Basic financial assets, which include debtors and cash and bank balances, are initially measured at transaction price including transaction costs and are subsequently carried at amortised cost using the effective interest method unless the arrangement constitutes a financing transaction, where the transaction is measured at the present value of the future receipts discounted at a market rate of interest. Financial assets classified as receivable within one year are not amortised.
Financial assets, other than those held at fair value through profit and loss, are assessed for indicators of impairment at each reporting end date.
Financial assets are impaired where there is objective evidence that, as a result of one or more events that occurred after the initial recognition of the financial asset, the estimated future cash flows have been affected. If an asset is impaired, the impairment loss is the difference between the carrying amount and the present value of the estimated cash flows discounted at the asset’s original effective interest rate. The impairment loss is recognised in profit or loss.
If there is a decrease in the impairment loss arising from an event occurring after the impairment was recognised, the impairment is reversed. The reversal is such that the current carrying amount does not exceed what the carrying amount would have been, had the impairment not previously been recognised. The impairment reversal is recognised in profit or loss.
Financial assets are derecognised only when the contractual rights to the cash flows from the asset expire or are settled, or when the group transfers the financial asset and substantially all the risks and rewards of ownership to another entity, or if some significant risks and rewards of ownership are retained but control of the asset has transferred to another party that is able to sell the asset in its entirety to an unrelated third party.
Financial liabilities and equity instruments are classified according to the substance of the contractual arrangements entered into. An equity instrument is any contract that evidences a residual interest in the assets of the group after deducting all of its liabilities.
Basic financial liabilities, including creditors, bank loans, loans from fellow group companies and preference shares that are classified as debt, are initially recognised at transaction price unless the arrangement constitutes a financing transaction, where the debt instrument is measured at the present value of the future payments discounted at a market rate of interest. Financial liabilities classified as payable within one year are not amortised.
Debt instruments are subsequently carried at amortised cost, using the effective interest rate method.
Trade creditors are obligations to pay for goods or services that have been acquired in the ordinary course of business from suppliers. Amounts payable are classified as current liabilities if payment is due within one year or less. If not, they are presented as non-current liabilities. Trade creditors are recognised initially at transaction price and subsequently measured at amortised cost using the effective interest method.
Financial liabilities are derecognised when the group's contractual obligations expire or are discharged or cancelled.
Equity instruments issued by the group are recorded at the proceeds received, net of transaction costs. Dividends payable on equity instruments are recognised as liabilities once they are no longer at the discretion of the group.
The tax expense represents the sum of the tax currently payable and deferred 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 group’s liability for current tax is calculated using tax rates that have been enacted or substantively enacted by the reporting end date.
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 if, and only if, there is 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.
The costs of short-term employee benefits are recognised as a liability and an expense, unless those costs are required to be recognised as part of the cost of stock or fixed assets.
The cost of any unused holiday entitlement is recognised in the period in which the employee’s services are received.
Termination benefits are recognised immediately as an expense when the company is demonstrably committed to terminate the employment of an employee or to provide termination benefits.
Payments to defined contribution retirement benefit schemes are charged as an expense as they fall due.
Equity-settled share-based payments are measured at fair value at the date of grant by reference to the fair value of the equity instruments granted using the Black Scholes model. The fair value determined at the grant date is expensed on a straight-line basis over the vesting period, based on the estimate of shares that will eventually vest. A corresponding adjustment is made to equity.
The expense in relation to options over the parent company’s shares granted to employees of a subsidiary is recognised by the company as a capital contribution, and presented as an increase in the company’s investment in that subsidiary.
When the terms and conditions of equity-settled share-based payments at the time they were granted are subsequently modified, the fair value of the share-based payment under the original terms and conditions and under the modified terms and conditions are both determined at the date of the modification. Any excess of the modified fair value over the original fair value is recognised over the remaining vesting period in addition to the grant date fair value of the original share-based payment. The share-based payment expense is not adjusted if the modified fair value is less than the original fair value.
Cancellations or settlements (including those resulting from employee redundancies) are treated as an acceleration of vesting and the amount that would have been recognised over the remaining vesting period is recognised immediately.
Rentals payable under operating leases, including any lease incentives received, are charged to profit or loss on a straight line basis over the term of the relevant lease except where another more systematic basis is more representative of the time pattern in which economic benefits from the leased asset are consumed.
Transactions in currencies other than pounds sterling are recorded at the rates of exchange prevailing at the dates of the transactions. At each reporting end date, monetary assets and liabilities that are denominated in foreign currencies are retranslated at the rates prevailing on the reporting end date. Gains and losses arising on translation in the period are included in profit or loss.
In the application of the group’s accounting policies, the directors are required to make judgements, estimates and assumptions about the carrying amount of assets and liabilities that are not readily apparent from other sources. The estimates and associated assumptions are based on historical experience and other factors that are considered to be relevant. Actual results may differ from these estimates.
The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised where the revision affects only that period, or in the period of the revision and future periods where the revision affects both current and future periods.
The estimates and assumptions which have a significant risk of causing a material adjustment to the carrying amount of assets and liabilities are as follows.
At the year end, supplier rebates are recognised in other debtors. The amounts receivable from rebates affects the cost of sales on invoice and are often subject to negotiation after the balance sheet date. A number of agreements are non-coterminous with the financial year end, requiring judgement over the amounts receivable. At the balance sheet date, the directors estimate the amount of rebate due to the company, based upon the agreements in place.
At the balance sheet date, management had estimated supplier rebates due back to the Group stood at £243,553 (2023: £307,463). A 10% increase or decrease in the rebates would result in a £24,355 (2023: £30,746) rise or drop in profit before tax respectively.
The directors review the bad debt provision on a monthly basis and apply professional judgement, combined with customer knowledge to quantify a bad debt provision. The provision continues to be reviewed on a monthly basis, with variances being released to the profit and loss as they arise.
The average monthly number of persons (including directors) employed by the group and company during the year was:
Their aggregate remuneration comprised:
The number of directors for whom retirement benefits are accruing under defined contribution schemes amounted to 2 (2023 - 2).
All the interest received in the periods are related to financial assets measured at amortised cost.
All the interest expense in the periods are related to financial liabilities not measured at fair value through profit or loss.
During the year an amount of £69,677 (2023: £128,185) owed from a company under mutual control was written-off as a result of doubts over its recoverability. This impairment is included as a separate line item in the statement of comprehensive income.
The main corporation tax rate increased from 19% to 25% from 1 April 2023. The 25% main rate of corporation tax and marginal relief will apply to any asset sales or timing differences that reverse on or after this date.
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:
On 30 March 2022, the company acquired 100% ownership of Generation Media Limited via a share for share exchange for £1,030.
Generation Media GmbH was incorporated on 22 February 2021, 100% of its shareholding at a nominal value of £22,262, was transferred to Generation Media Enterprises Limited on 8 April 2021, when it became part of the group and commenced trading.
Details of the company's subsidiaries at 31 March 2024 are as follows:
Registered office addresses (all UK unless otherwise indicated):
The following are the major deferred tax liabilities and assets recognised by the group and company, and movements thereon:
A defined contribution pension scheme is operated for all qualifying employees. The assets of the scheme are held separately from those of the group in an independently administered fund.
On 31 October 2023, shares in Generation Media Enterprises Limited, under the Enterprise Management Incentive Scheme were exercised. As a result, 800 Ordinary D 1p shares were issued at an exercise price of £74.32 per share, and 500 Ordinary E 1p shares were issued at an exercise price of £74.32 per share for a total consideration of £96,616. As a result of the employees involved being employed by Generation Media Limited, an expense of £300,717 has been included in admin expenses, in relation to equity settled share based payments.
The company has 5 classes of ordinary shares. All shares rank pari passu with no restrictions on the distribution of dividends and repayment of capital.
On 31 October 2023, Generation Media Enterprises Limited established a trust, GME Trustees Limited, to be constituted as an employee-ownership trust. The trust has been set up by the existing company owners, for the benefit of all employees and for the purposes of section 236H of the Taxation of Chargeable Gains Act 1992. The purchase of 51% of the shares of Generation Media Enterprises Limited, was financed through:
1) Cash consideration for the sum of £8,250,000; and
2) The creation of secured interest-free redeemable loan notes 2023 to the value of £8,070,000.
The loan notes are repayable on demand, if funds are available within the EOT, on an exit event or expire on 31 October 2035
On 29 March 2022, all share options held in Generation Media Limited, were vested and exercised as a result of an exit event due to a share-for-share exchange which took place between Generation Media Limited and Generation Media Enterprises Limited. As a result of the exercise, an additional 10,000 ordinary 1p shares were issued, 4,650 for an exercise price of £7 per share and 5,350 for an exercise price of £8.11 per share, giving rise to a share premium of £75,838.50.
On 31 October 2023, shares under the Enterprise Management Incentive Scheme were exercised. As a result, 800 Ordinary D 1p shares were issued at an exercise price of £74.32 per share, and 500 Ordinary E 1p shares were issued at an exercise price of £74.32 per share for a total consideration of £96,616.
The operating lease is for offices in central London for a period of 10 years, with a break clause available on the 5 year anniversary of the lease. Lease payments are subject to a rent review on the 5 year anniversary of the lease.
At the reporting end date the group had outstanding commitments for future minimum lease payments under non-cancellable operating leases, which fall due as follows:
During the year the group entered into the following transactions with related parties:
The following amounts were outstanding at the reporting end date:
The amounts owed are unsecured, interest-free, have no fixed date of repayment and are repayable on demand.
The other related parties are related by virtue of the entities having common key management personnel.
The following amounts were recognised as an expense in the period in respect of bad and doubtful debts due from related parties:
The company has taken advantage of the exemption allowed under Section 33.1A of FRS 102 not to disclose transactions with wholly owned members of the group.
The company has taken advantage of the exemption allowed under Section 33.7A of FRS 102 not to disclose the remuneration of key management personnel as the group considers the directors are one and the same.
Dividends totalling £192,500 (2023 - £385,000) were paid in the year in respect of shares held by the company's directors.
At the year-end the company owed the directors £158,029 (2023: £80,041), as included in other creditors. The amount owed to the directors are unsecured, interest-free, have no fixed date of repayment and are repayable on demand.