The directors present their strategic report and audited financial statements for the period ended 28 December 2023.
The Group has continued to develop its offerings in the UK with the completion of the Ealing Broadcast Centre (EBC) and has grown its international business. The Group offers a full range of broadcast requirements including UHD HDR outside broadcasts, post-production, studios, RF and satellite, managed services and systems integrations.
The Group continues a comprehensive research and development programme to strengthen the Group’s offering to customers and its ability to cope with multiple challenges, increase resilience and disaster recovery facilities.
Since 2013, the Group was lead partner for BT Sport, managing the BT Sport production hub based in Stratford, London. In June 2023, BT Sport closed its studios operation following the acquisition of this business by Warner Brothers Discovery, as a result, the Group restructured its operational infrastructure and financing. In December 2023, the Group agreed new financing terms with HSBC and Praetura Asset Finance Limited.
Debt service cover is indicated by the EBITDA generated which was £4,111,553 in 2023 (2022 £9,213,291). During the year, the Company restructured its obligations, the directors consider that the resulting debt service cover to be satisfactory.
The balance sheet total net asset of £4,271,127, which is a reduction from the previous year, reflects the additional restructuring costs incurred while the company transitions to a more robust business model.
The Group maintains a continual review of competitive pressures in the film, television and media industries; continual review of value for money to ensure high standard of quality and client satisfaction. Client requirements vary according to their needs and the market, and it is the responsibility of management to ensure sufficient working capital is available to service those requirements at all times. This is achieved by careful cash management and the control of debt-to-equity ratios.
The high caliber of staff is of great value to the business and the Group seeks to provide the best career path, remuneration package and working environment for all staff, as well as interesting, intellectually challenging and satisfying projects.
By the very nature of the sector, the Group is asset intensive and operates a wide range of fixed assets which are either owned outright or funding by means of asset finance. As a result, the Group has a high level of gearing; asset finance lease obligations and bank loans of £14,390,606, including £2.9m of coronavirus business interruption loan scheme (CBIL), were outstanding at the balance sheet date (2022: £14,213,592). Whilst this is a high value, the Directors believe this to be satisfactory owing to the capital intensive nature of the business, and the value of client contracts in place.
The inherent interest rates of asset finance arrangements are fixed for the remaining life of those finance leases. The Group may have requirements for asset backed finance for projects that arise in the future and the rate of interest is a risk factor in determining competitiveness.
The Group continues to work with existing customers / new prospects on a range of new projects, utilising assets in all divisions of the Group. The final investments into the new Ealing Broadcast Centre (EBC) were completed in the year which significantly enhance the width, depth and quality of services that the Group is able to provide.
The key indicators of performance referred to above are analysed below.
| 2023 | 2022 |
|
|
|
Net operating profit/(loss) percentage on turnover | (4.1%) | 5.5% |
Total gross debt to EBITDA | 6.51 | 3.76 |
Direct labour costs as a percentage of turnover | 38% | 37% |
Although many of the indicators are satisfactory during the year, the Directors are keen to maintain the level of strategic capital investment in technology, maintaining the business at the forefront of the broadcast market. The directors believe this strategic investment will enable the company to maintain its position within the UK and global market in the coming years.
Under s172 of the Companies Act 2006 directors of UK companies have a duty to promote the success of their company for the benefit of the members as a whole and, in doing so, have regard to:
The likely consequences of any decision in the long term;
The interests of the Group’s employees:
The need to foster the Group’s business relationships with suppliers, customers and others;
The impact of the Group’s operations on the community and the environment;
The desirability of the Company maintaining a reputation for high standards of business conduct; and
The need to act fairly as between members of the Group.
The directors of Timeline Television Group Limited consider the following areas to be of key importance in his fulfilment of this duty:
Carrying out detailed planning and forecasting to ensure the ongoing financial safety of the business;
Monitoring the business plan in order to control deviation and achieve annual revenue targets;
Seeking opportunities, by winning new work and fostering key relationships to grow the business for the benefit of current and future employees, customers and suppliers as well as the wider UK economy;
Supervising the overall strategy of the Group and maintaining the highest standards of integrity and honesty in the company’s dealing with employees, suppliers, the general public and local and national government; and
Implement several measures in order to ensure the continuity of Group and its liquidity (see “Fair Review of the Business”).
On behalf of the board
The director presents his annual report and financial statements for the Period ended 28 December 2023.
The results for the Period are set out on page 9.
Ordinary dividends were paid amounting to £150,000. The director does not recommend payment of a further dividend.
The director who held office during the Period and up to the date of signature of the financial statements was as follows:
A fundamental part of the Company’s business is research and development, providing a source and reference for design and provision of highly technological, broadcast work flows and equipping solutions, design and installation of studio facilities and the capture and broadcast of bespoke content.
Management recognise that the business is a combination of low and medium margin income streams that require differing management techniques and management focus in order to develop profitably.
The business also requires a continual re-investment in new and technology-heavy work flow designs and equipment.
The Company has embarked on a series of research and development projects to develop a number of new technologies and products which it expects will provide enhanced income streams, new business direction, business impetus and increase in core business activities.
Such projects include:
Ultra-High Definition (UHD) broadcast technology
Internet Protocol (IP) based outside broadcast technology
Broadband streaming and data signal management for satellite communications purposes
Bespoke designed agile cameras for yachting and other marine purposes
Internet Protocol online and offline work flows
Innovative studio design
Remote editing technology
Following the loss of a key contract post year end, the Group has implemented cost saving initiatives across the business to mitigate the impact. To assist with this, the Group has re-financed the existing asset finance with a new asset finance provider.
The company continues to maintain its position as a leading provider of services and equipment to the television industry by investing in the latest technological innovations.
The Directors consider the greenhouse gas emissions, energy consumption and energy efficiency action at a group level and therefore the below disclosure is on a group basis. The Group is firmly committed to operating in a green and sustainable manner and takes its responsibilities in there areas extremely seriously.
The group has followed the 2019 HM Government Environmental Reporting Guidelines. The group has also used the GHG Reporting Protocol – Corporate Standard and have used the 2022 UK Government’s Conversion Factors for Company Reporting
The chosen intensity measurement ratio is total gross emissions in metric tonnes CO2e to Turnover, the recommended ratio for the sector.
The refurbishment of our head office updated all heating and air-conditioning units to the latest standards. This included upgrading the lighting to the latest energy LED panels to maximise energy efficiency.
We have audited the financial statements of Timeline Television Group Limited (the 'parent company') and its subsidiaries (the 'group') for the Period ended 28 December 2023 which comprise the group statement of comprehensive income, the group statement of financial position, the company statement of financial position, 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 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 FRS 102 The Financial Reporting Standard applicable in the UK and Republic of Ireland (United Kingdom Generally Accepted Accounting Practice).
Basis for opinion
Emphasis of matter - going concern
Conclusions relating to going concern
In auditing the financial statements, we have concluded that the director's 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 director with respect to going concern are described in the relevant sections of this report.
Other information
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 director's report for the financial Period for which the financial statements are prepared is consistent with the financial statements; and
the strategic report and the director's report have been prepared in accordance with applicable legal requirements.
The extent to which our procedures are capable of detecting irregularities, including fraud, is detailed below.
Our approach to identifying and assessing the risks of material misstatement in respect of irregularities, including fraud and non-compliance with laws and regulations, was as follows:
the engagement partner ensured that the engagement team collectively had the appropriate competence, capabilities and skills to identify or recognise non-compliance with applicable laws and regulations;
we identified the laws and regulations applicable to the company through discussions with directors and other management, and from our commercial knowledge and experience of the broadcast service sector;
we focused on specific laws and regulations which we considered may have a direct material effect on the financial statements or the operations of the company, including the Companies Act 2006, taxation legislation, data protection, anti-bribery, employment, environmental and health and safety legislation;
we assessed the extent of compliance with the laws and regulations identified above through making enquiries of management and inspecting legal correspondence; and
identified laws and regulations were communicated within the audit team regularly and the team remained alert to instances of non-compliance throughout the audit.
We assessed the susceptibility of the company’s financial statements to material misstatement, including obtaining an understanding of how fraud might occur, by:
making enquiries of management as to where they considered there was susceptibility to fraud, their knowledge of actual, suspected and alleged fraud; and
considering the internal controls in place to mitigate risks of fraud and non-compliance with laws and regulations.
To address the risk of fraud through management bias and override of controls, we:
performed analytical procedures to identify any unusual or unexpected relationships;
reviewed all transactions listed;
assessed whether judgements and assumptions made in determining the accounting estimates were indicative of potential bias; and
investigated the rationale behind significant or unusual transactions.
In response to the risk of irregularities and non-compliance with laws and regulations, we designed procedures which included, but were not limited to:
agreeing financial statement disclosures to underlying supporting documentation; and
enquiring of management as to actual and potential litigation and claims.
There are inherent limitations in our audit procedures described above. The more removed that laws and regulations are from financial transactions, the less likely it is that we would become aware of non-compliance. Auditing standards also limit the audit procedures required to identify non-compliance with laws and regulations to enquiry of the directors and other management and the inspection of regulatory and legal correspondence, if any.
Material misstatements that arise due to fraud can be harder to detect than those that arise from error as they may involve deliberate concealment or collusion.
A further description of our responsibilities is available on the Financial Reporting Council’s website at: https://www.frc.org.uk/auditorsresponsibilities. This description forms part of our auditor's report.
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.
The income statement has been prepared on the basis that all operations are continuing operations.
As permitted by s408 Companies Act 2006, the company has not presented its own income statement and related notes. The company’s profit for the year was £216,239 (2022 - £14,101 loss).
Timeline Television Group Limited (“the company”) is a private limited company domiciled and incorporated in England and Wales. The registered office is 8 Acre Road, Reading, RG2 0SU. The trading address is Bldg B Ealing Studios, Ealing Green, London, W5 5EP
The group consists of Timeline Television Group Limited and all of its subsidiaries.
The financial statements for the accounting reference period date 28 December 2023 have been prepared for a period up to 31 December 2023 as the company has taken advantage Section 390(3)(b) of the Companies Act 2006 in preparing its financial statements.
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;
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.
The consolidated financial statements incorporate those of Timeline Television Group Limited and all of its subsidiaries (ie entities that the group controls through its power to govern the financial and operating policies so as to obtain economic benefits). Subsidiaries acquired during the year are consolidated using the purchase method. Their results are incorporated from the date that control passes.
All financial statements have a accounting reference period date of 28 December 2023 and have been prepared for a period up to 31 December 2023. 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.
These financial statements have been prepared on a going concern basis. At the year end the Group has net current liabilities of £9,134,825.
The Directors have prepared detailed cash flow projections for a period of 12 months from the date the Group and Company’s financial statements were approved which show that the Group is expected to continue to trade profitably and generate sufficient cash to meet all liabilities as they fall due.
During the period the Group and Company's liquidity is driven by the following significant factors:
Covenant measures associated with existing bank facilities were breached during the financial period ended 28 December 2023. These breaches were subsequently waived and revised bank facilities were agreed in December 2023 that included updated covenant tests. The Group and Company has operated within these limits up to the date the financial statements were approved and is projected to do so throughout the period of the cash flow projections;
The cashflow projections rely on the continuing availability of the £2,750,000 overdraft facility provided by the main clearing bank which is, as is usually the case, repayable on demand. This facility is due for renewal on 31 March 2026. The Directors have been given no reason to doubt that this facility will not continue to be made available;
Cash flow projections include the assumption that limited additional capital assets will be acquired over the next 12 months and sufficient operational assets exist to meet both existing and projected contractual commitments during this period. The directors are confident that should additional assets be required beyond that included within the projections then separate asset finance will be available to fund this investment.
After considering the uncertainties described above, the directors have a reasonable expectation that the Group and Company can continue in operational existence for the foreseeable future. It is on this basis that the directors consider it appropriate to prepare the financial statements on a going concern basis. The financial statements do not include the adjustments that would result if the Group and Company were unable to continue as a going concern.
Revenue is recognised at the fair value of the consideration received or receivable for goods and services provided in the normal course of business, and is shown net of VAT and other sales related taxes. The fair value of consideration takes into account trade discounts, settlement discounts and volume rebates.
Revenue from contracts for the provision of broadcast services is recognised by reference to the stage of completion when the stage of completion, costs incurred and costs to complete can be estimated reliably. The stage of completion is calculated by comparing costs incurred, mainly in relation to contractual hourly staff rates and materials, as a proportion of total costs. Where the outcome cannot be estimated reliably, revenue is recognised only to the extent of the expenses recognised that it is probable will be recovered.
Rental contracts are recognised over the term of the rental period.
Research expenditure is written off against profits in the year in which it is incurred. Identifiable development expenditure is capitalised to the extent that the technical, commercial and financial feasibility can be demonstrated.
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 income statement.
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 and intangible assets to determine whether there is any indication that those assets have suffered an impairment loss. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment loss (if any). Where it is not possible to estimate the recoverable amount of an individual asset, the company estimates the recoverable amount of the cash-generating unit to which the asset belongs.
The carrying amount of the investments accounted for using the equity method is tested for impairment as a single asset. Any goodwill included in the carrying amount of the investment is not tested separately for impairment.
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 statement of financial position 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 trade and other receivables 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 trade and other payables, bank loans and loans from fellow group companies shares, 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 receipts 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 payables 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 payables are recognised initially at transaction price and subsequently measured at amortised cost using the effective interest method.
Debt instruments that do not meet the conditions in FRS 102 paragraph 11.9 are subsequently measured at fair value through profit or loss. Debt instruments may be designated as being measured at fair value though profit or loss to eliminate or reduce an accounting mismatch or if the instruments are measured and their performance evaluated on a fair value basis in accordance with a documented risk management or investment strategy.
Financial liabilities 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.
Derivatives are initially recognised at fair value at the date a derivative contract is entered into and are subsequently remeasured to fair value at each reporting end date. The resulting gain or loss is recognised in profit or loss immediately unless the derivative is designated and effective as a hedging instrument, in which event the timing of the recognition in profit or loss depends on the nature of the hedge relationship.
A derivative with a positive fair value is recognised as a financial asset, whereas a derivative with a negative fair value is recognised as a financial liability.
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 income statement 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 income statement, 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 non-current assets.
The cost of any unused holiday entitlement is recognised in the period in which the employee’s services are received.
Termination benefits are recognised immediately as an expense when the company is demonstrably committed to terminate the employment of an employee or to provide termination benefits.
Payments to defined contribution retirement benefit schemes are charged as an expense as they fall due.
Leases are classified as finance leases whenever the terms of the lease transfer substantially all the risks and rewards of ownership to the lessees. All other leases are classified as operating leases.
Assets held under finance leases are recognised as assets at the lower of the assets fair value at the date of inception and the present value of the minimum lease payments. The related liability is included in the statement of financial position as a finance lease obligation. Lease payments are treated as consisting of capital and interest elements. The interest is charged to profit or loss so as to produce a constant periodic rate of interest on the remaining balance of the liability.
Rentals payable under operating leases, including any lease incentives received, are charged to profit or loss on a straight line basis over the term of the relevant lease except where another more systematic basis is more representative of the time pattern in which economic benefits from the leased asset are consumed.
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 director is required to make judgements, estimates and assumptions about the carrying amount of assets and liabilities that are not readily apparent from other sources. The estimates and associated assumptions are based on historical experience and other factors that are considered to be relevant. Actual results may differ from these estimates.
The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised where the revision affects only that period, or in the period of the revision and future periods where the revision affects both current and future periods.
The following judgements (apart from those involving estimates) have had the most significant effect on amounts recognised in the financial statements.
The group has entered into commercial property leases as a lessee to obtain the use of property, plant, and equipment. The classification of such leases as a operating or finance lease requires the company to determine, based on an evaluation of the terms and conditions of the arrangements, whether it acquires the significant risks and rewards of ownership of these assets and accordingly whether the lease requires an asset and liability to be recognised in the statement of financial position.
Property, plant and equipment are recorded at cost less accumulated depreciation. Judgement is required to determine whether there are indicators of impairment of the company’s tangible assets. Factors taken into consideration in reaching such a decision include the economic viability and expected future financial performance of the asset.
The "percentage of completion method" is used to determine the appropriate amount of revenues and profits to recognise in a given period. The stage of completion is measured by the proportion of contract costs incurred for work performed to date compared to the estimated total contract costs.
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.
Property, plant and equipment are depreciated over their useful lives taking into account residual values, where appropriate. The actual lives of the assets and residual values are assessed annually and may vary depending on a number of factors. In re-assessing asset lives, factors such as technological innovation, product life cycles and maintenance programmes are taken into account. Residual value assessments consider issues such as future market conditions, the remaining life of the asset and projected disposal values.
The group makes an estimate of the recoverable value of trade and other receivables. When assessing impairment of trade and other receivables, management considers factors including the current credit rating of the receivable, the ageing profile of receivables and historical experience.
The group makes an estimate of the provision required against sales contracts. When assessing any provision requirement management considers all applicable factors including industry norms and history of claims made.
The group is required to reasonably forecast future dilapidations for the leased properties, to ensure the return of the properties to the original condition as at the inception of the lease.
An analysis of the group's revenue is as follows:
Following the closure of an historic contractual arrangement it was determined that an accrual liability was no longer payable and this balance has been released in the year.
The average monthly number of persons (including directors) employed by the group and company during the Period was:
Their aggregate remuneration comprised:
The actual (credit)/charge for the Period can be reconciled to the expected (credit)/charge for the Period based on the profit or loss and the standard rate of tax as follows:
The net carrying value of tangible fixed assets includes the following in respect of assets held under finance leases or hire purchase contracts.
Details of the company's subsidiaries at 28 December 2023 are as follows:
Registered office addresses (all UK unless otherwise indicated):
Bank loans are secured by fixed and floating charges over the assets of the company. The average loan term is 5 years on a fixed repayment basis.
Finance lease payments represent rentals payable by the group for certain items of plant and machinery. Leases include purchase options at the end of the lease period, and no restrictions are placed on the use of the assets. The average lease term is 3 years. All leases are on a fixed repayment basis and no arrangements have been entered into for contingent rental payments.
The recognised dilapidations provision, relates to the estimated cost to return leased properties to their original condition at the end of the lease term in line with contractual terms.
Deferred tax assets and liabilities are offset where the group or company has a legally enforceable right to do so. The following is the analysis of the deferred tax balances (after offset) for financial reporting purposes:
The deferred tax liability set out above is expected to reverse more than 12 months and relates to accelerated capital allowances that are expected to mature within the same period.
As a result of the change to the main UK corporation tax rate substantively enacted by the UK Government, the Corporation tax has increased to 25% from 1 April 2023.
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.
The company has one class of ordinary shares which carry equal voting rights. Each share ranks equally for dividends declared and any distribution made on winding up.
The group has entered into a composite agreement guaranteeing banking facilities provided by HSBC Invoice Finance UK Limited (HIF), HSBC Equipment Finance (HEF) and HSBC Bank plc. The securities include fixed charge over all present freehold and leasehold property, first fixed charge over book and other debts, chattels, goodwill and uncalled capital, both present and future, and first floating charge over all assets and undertakings both present and future.
The total balance outstanding to HSBC under the business loan facility was £2,953,333 (2022: £3,620,000). The total balance outstanding to HIF was £561,031 (2022: £2,663,003).
Operating lease payments represent rentals payable by the group for properties used for studio and office facilities. Leases are negotiated separately for each of the locations.
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:
Following the loss of a key contract post year end, the Group has implemented cost saving initiatives across the business to mitigate the impact. To assist with this, the Group has partially re-financed the existing asset finance with a new asset finance provider.
Dividends totalling £150,000 (2022 - £186,500) were paid in the Period in respect of shares held by the company's directors.