Company registration number 08667465 (England and Wales)
ENTERTAINMENT PARTNERS UK LIMITED
ANNUAL REPORT AND FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
ENTERTAINMENT PARTNERS UK LIMITED
COMPANY INFORMATION
Directors
M Goldstein
D Seidel
Company number
08667465
Registered office
1010 Eskdale Road
Winnersh Triangle
Wokingham
Berkshire
RG41 5TS
Auditor
Gravita Audit II Limited
Aldgate Tower
2 Lenman Street
London
E1 8FA
ENTERTAINMENT PARTNERS UK LIMITED
CONTENTS
Page
Strategic report
1 - 2
Directors' report
3 - 4
Independent auditor's report
5 - 7
Statement of comprehensive income
8
Statement of financial position
9
Statement of changes in equity
10
Notes to the financial statements
11 - 23
ENTERTAINMENT PARTNERS UK LIMITED
STRATEGIC REPORT
FOR THE YEAR ENDED 31 DECEMBER 2023
- 1 -
The directors present the strategic report for the year ended 31 December 2023.
Business review
Entertainment Partners UK Limited principal activity is the sales activity of the following products and services; EP Casting Portal & Academy, Production Portal and Accounting Software Package (Smart Accounting).
The Company’s performance was significantly impacted by the 6 month long strike by US unions Writers Guild of America (WGA) and The Screen Actors Guild-American Federation of Television and Radio Artists (SAG-AFTRA) which disrupted our clients locally in the UK as well as Globally. As a result, we are showing a revenue decline of 34% predominately driven by a fall in Royalty license revenue.
In 2023, the Company has continued to invest in the workforce and the full year run rate of 2022 hires led to an increase in the cost base. This is partially offset by the inclusion of other operating income relating to the recharge of costs to another entity within the UK group.
The reduction in revenue and increase in cost base have resulted in a Loss before Tax position of £9,263,867, an increase from £3,946,823 in 2022. A key driver of the increased cost is the impairment of intangible assets relating to products which have now been sunsetted in 2024.
The parent entity, Entertainment Partners Holding Limited, will continue to provide financial backing to the UK group during this growth phase and the Directors’ are confident in the UK groups growth targets and ability to drive continued revenue growth in 2023 and beyond.
Principal risks and uncertainties
The company faces a number of business risks that may impact the various revenue lines within the UK group. In view of this, the directors are looking carefully at the current market, opportunities for further acquired growth and continued in-house development of the product suite sold to our clients. The following risks set out are those the Directors have identified and assessed the business in order to manage the external risk factors.
Invasion of Ukraine
Russia’s recent invasion of Ukraine increases the risk of supply chain disruptions and impacts on commodity prices. Any of these factors, individually or in aggregate, could have a material effect on our earnings, cash flows and financial condition.
Responsive action has taken place to widen the supplier base. The company now has a number of alternative suppliers it could use for each of its products and components. The company is continuing to work closely with its new and long-standing suppliers to minimise the risk of future disruption.
Macroeconomic uncertainty in UK
At present, there is an increased level of macroeconomic uncertainty, including rising interest rates, cost and wage inflation. This is starting to impact on levels of customer demand, risk of non-payment and a rise in our own operational costs particularly in relation to our supply chain.
We are actively monitoring the situation and have contingency measures in place to manage these risks which include the widening of the supplier base and working with those suppliers to build relationships and obtain the best possible prices.
The company has a loyal customer base, which somewhat reduces its exposure to a temporary downturn in trade.
Exposure to foreign economies
The company only has one overseas market at present, but even these limited sales give rise to foreign exchange risks. Changing legislation in other regulations can affect product specification, as does the effect of the UK having left the European Union. More diversity in legislation can only increase manufacturing costs.
Foreign exchange risk is mitigated by careful use of currency contracts. The directors are taking a cautious approach to expansion into overseas markets, preferring to concentrate on consolidating the domestic position.
ENTERTAINMENT PARTNERS UK LIMITED
STRATEGIC REPORT (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
- 2 -
Product obsolescence
The technology industry is fast moving and there are risks associated with investing too heavily in a product that then becomes obsolete. In particular, this can lead to wasted development costs, written off inventory and opportunity cost of time that could have been invested in other areas. There is also a reputational risk in being associated with out of date products.
The directors took responsive action to close the Memory Sticks division as consumer preferences for data storage continue to change. Continuous monitoring of the trade and popular press allows identification of trends and in future years funds will be set aside for speculative research to identify the best avenues for development (historically, efforts have been focused on development rather than identification of products).
New entrants to the market
The barriers to entry are fairly low, and new entrants who specialise in only one item and invest significant capital can make cost savings, particularly if their production is based overseas. New entrants can therefore potentially offer low selling prices to gain initial market share, which directly affects sales.
The company has a sufficiently diverse product range to allow some absorption of issues from temporary loss of trade. Development of new products continues, with effort directed towards innovation so that the company’s products can be clearly distinguished from those of competitors.
WGA and SAG-AFTRA Strikes
The US unions Writers Guild of America (WGA) and The Screen Actors Guild-American Federation of Television and Radio Artists (SAG-AFTRA) both were on strike for large periods of 2023, causing significant disruption to our client base. The Company has worked closely with Entertainment Partners LLC to ensure appropriate actions are taken to mitigate impact on the Company’s revenue.
Future develpments
The directors anticipate the business environment will remain competitive. They believe that the company is in a good financial position and that the risks that have been identified are being well managed. With careful focus on appropriate diversification and development of new products, as well as continuing review of the state of the market and the activities of competitors, the directors are confident in the company's ability to maintain and build on this position, albeit with cautious growth expectations.
Financial instruments
The company has a normal level of exposure to price, credit, liquidity and cash flow risks arising from trading activities which are largely conducted in sterling, with the only foreign currency transactions being covered by suitable currency contracts to minimise exposure to exchange rate volatility. The company does not enter into any formally designated hedging arrangements.
Research and development
Entertainment Partners conducted R&D activities for the purpose of developing novel software applications and providing new functionality to existing applications during the year.
D Seidel
Director
27 May 2025
ENTERTAINMENT PARTNERS UK LIMITED
DIRECTORS' REPORT
FOR THE YEAR ENDED 31 DECEMBER 2023
- 3 -
The directors present their annual report and financial statements for the year ended 31 December 2023.
Principal activities
The principal activity of the Company continued to be that of the provision of access to a human capital management platform.
Results and dividends
The results for the year are set out on page 8.
No ordinary dividends were paid. The directors do not recommend payment of a final dividend.
Directors
The directors who held office during the year and up to the date of signature of the financial statements were as follows:
M Goldstein
D Seidel
Post reporting date events
Please refer to note 23 to the financial statements which details a number of share allotments made by the Company following the reporting date.
Future developments
Please refer to the strategic report for more information on expected future developments concerning the Company.
Auditor
In accordance with the company's articles, a resolution proposing that Gravita Audit II Limited be reappointed as auditor of the company will be put at a General Meeting.
Statement of directors' responsibilities
The directors are responsible for preparing the annual report and the financial statements in accordance with applicable law and regulations.
Company law requires the directors to prepare financial statements for each financial year. Under that law the directors have elected to prepare the financial statements in accordance with United Kingdom Generally Accepted Accounting Practice (United Kingdom Accounting Standards and applicable law). Under company law the directors must not approve the financial statements unless they are satisfied that they give a true and fair view of the state of affairs of the company and of the profit or loss of the company for that period. In preparing these financial statements, the directors are required to:
select suitable accounting policies and then apply them consistently;
make judgements and accounting estimates that are reasonable and prudent;
prepare the financial statements on the going concern basis unless it is inappropriate to presume that the company will continue in business.
The directors are responsible for keeping adequate accounting records that are sufficient to show and explain the company’s transactions and disclose with reasonable accuracy at any time the financial position of the company and enable them to ensure that the financial statements comply with the Companies Act 2006. They are also responsible for safeguarding the assets of the company and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.
ENTERTAINMENT PARTNERS UK LIMITED
DIRECTORS' REPORT (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
- 4 -
Statement of disclosure to auditor
So far as each person who was a director at the date of approving this report is aware, there is no relevant audit information of which the company’s auditor is unaware. Additionally, the directors individually have taken all the necessary steps that they ought to have taken as directors in order to make themselves aware of all relevant audit information and to establish that the company’s auditor is aware of that information.
Medium-sized companies exemption
This report has been prepared in accordance with the provisions applicable to companies entitled to the medium-sized companies exemption.
On behalf of the board
D Seidel
Director
27 May 2025
ENTERTAINMENT PARTNERS UK LIMITED
INDEPENDENT AUDITOR'S REPORT
TO THE MEMBERS OF ENTERTAINMENT PARTNERS UK LIMITED
- 5 -
Opinion
We have audited the financial statements of Entertainment Partners UK Limited (the 'company') for the year ended 31 December 2023 which comprise the statement of comprehensive income, the statement of financial position, the statement of changes in equity and notes to the financial statements, including significant accounting policies. The financial reporting framework that has been applied in their preparation is applicable law and United Kingdom Accounting Standards, including Financial Reporting Standard 102 The Financial Reporting Standard applicable in the UK and Republic of Ireland (United Kingdom Generally Accepted Accounting Practice).
In our opinion the financial statements:
give a true and fair view of the state of the company's affairs as at 31 December 2023 and of its loss for the year then ended;
have been properly prepared in accordance with United Kingdom Generally Accepted Accounting Practice; and
have been prepared in accordance with the requirements of the Companies Act 2006.
We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and applicable law. Our responsibilities under those standards are further described in the Auditor's responsibilities for the audit of the financial statements section of our report. We are independent of the company in accordance with the ethical requirements that are relevant to our audit of the financial statements in the UK, including the FRC’s Ethical Standard, and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
Conclusions relating to going concern
In auditing the financial statements, we have concluded that the directors' use of the going concern basis of accounting in the preparation of the financial statements is appropriate.
Based on the work we have performed, we have not identified any material uncertainties relating to events or conditions that, individually or collectively, may cast significant doubt on the company's ability to continue as a going concern for a period of at least twelve months from when the financial statements are authorised for issue. However, because not all future events or conditions can be predicted this statement is not a guarantee as to the company's ability to continue as a going concern.
Our responsibilities and the responsibilities of the directors with respect to going concern are described in the relevant sections of this report.
The other information comprises the information included in the annual report other than the financial statements and our auditor's report thereon. The directors are responsible for the other information contained within the annual report. Our opinion on the financial statements does not cover the other information and, except to the extent otherwise explicitly stated in our report, we do not express any form of assurance conclusion thereon. Our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the course of the audit, or otherwise appears to be materially misstated. If we identify such material inconsistencies or apparent material misstatements, we are required to determine whether this gives rise to a material misstatement in the financial statements themselves. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact.
We have nothing to report in this regard.
Opinions on other matters prescribed by the Companies Act 2006
In our opinion, based on the work undertaken in the course of our audit:
the information given in the directors' report for the financial year for which the financial statements are prepared is consistent with the financial statements; and
the directors' report has been prepared in accordance with applicable legal requirements.
ENTERTAINMENT PARTNERS UK LIMITED
INDEPENDENT AUDITOR'S REPORT
TO THE MEMBERS OF ENTERTAINMENT PARTNERS UK LIMITED (CONTINUED)
- 6 -
Matters on which we are required to report by exception
In the light of the knowledge and understanding of the company and its environment obtained in the course of the audit, we have not identified material misstatements in the 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 concern basis of accounting unless the directors either intend to liquidate the company or to cease operations, or have no realistic alternative but to do so.
Auditor's responsibilities for the audit of the financial statements
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor's report that includes our opinion. Reasonable assurance is a high level of assurance but is not a guarantee that an audit conducted in accordance with ISAs (UK) will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements.
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. However, the primary responsibility for the prevention and detection of fraud rests with both those charged with governance of the entity and management.
The extent to which the audit was considered capable of detecting irregularities including fraud
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 senior statutory auditor ensured 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 entertainment 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 Companies Act 2006, taxation legislation, data protection, employment, health and safety legislation and anti-money laundering regulations.
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;
considering the internal controls in place to mitigate risks of fraud and non-compliance with laws and regulations.
ENTERTAINMENT PARTNERS UK LIMITED
INDEPENDENT AUDITOR'S REPORT
TO THE MEMBERS OF ENTERTAINMENT PARTNERS UK LIMITED (CONTINUED)
- 7 -
To address the risk of fraud through management bias and override of controls, we:
performed analytical procedures to identify any unusual or unexpected relationships;
tested journal entries with specific attributes to identify unusual transactions;
assessed whether judgements and assumptions made in determining the accounting estimates set out in Note 2 of the financial statements were indicative of potential bias;
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;
reading the minutes of meetings of those charged with governance;
enquiring of management as to actual and potential litigation and claims;
review of legal expenditure incurred during the year to identify instances of non-compliance with laws and regulations;
reviewing correspondence with HMRC.
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 by for example forgery, or intentional misrepresentation or through collusion. Our audit procedures are designed to detect material misstatement. We are not responsible for preventing non-compliance or fraud 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/auditorsresponsibilities. This description forms part of our auditor's 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.
Paul Woosey
Senior Statutory Auditor
For and on behalf of Gravita Audit II Limited
27 May 2025
Chartered Accountants
Statutory Auditor
Aldgate Tower
2 Lenman Street
London
E1 8FA
ENTERTAINMENT PARTNERS UK LIMITED
STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEAR ENDED 31 DECEMBER 2023
- 8 -
2023
2022
Notes
£
£
Turnover
3
5,225,422
7,876,071
Administrative expenses
(15,891,230)
(11,822,948)
Other operating income
1,004,306
Operating loss
4
(9,661,502)
(3,946,877)
Interest receivable and similar income
8
21,115
54
Interest payable and similar expenses
9
(6,293)
Loss before taxation
(9,646,680)
(3,946,823)
Tax on loss
10
382,753
499,816
Loss for the financial year and total comprehensive loss
(9,263,927)
(3,447,007)
The statement of comprehensive income has been prepared on the basis that all operations are continuing operations.
The notes on pages 11 to 23 form part of these financial statements.
ENTERTAINMENT PARTNERS UK LIMITED
STATEMENT OF FINANCIAL POSITION
AS AT 31 DECEMBER 2023
31 December 2023
- 9 -
2023
2022
Notes
£
£
£
£
Fixed assets
Intangible assets
12
2,107,307
2,928,900
Tangible assets
13
50,275
104,972
2,157,582
3,033,872
Current assets
Debtors
14
3,563,898
2,320,923
Cash at bank and in hand
1,178,699
2,395,944
4,742,597
4,716,867
Creditors: amounts falling due within one year
15
(2,943,083)
(3,529,716)
Net current assets
1,799,514
1,187,151
Net assets
3,957,096
4,221,023
Capital and reserves
Called up share capital
19
206
203
Share premium account
20
24,144,225
15,144,228
Profit and loss reserves
(20,187,335)
(10,923,408)
Total equity
3,957,096
4,221,023
The notes on pages 11 to 23 form part of these financial statements.
The financial statements were approved by the board of directors and authorised for issue on 27 May 2025 and are signed on its behalf by:
D Seidel
Director
Company registration number 08667465 (England and Wales)
ENTERTAINMENT PARTNERS UK LIMITED
STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 DECEMBER 2023
- 10 -
Share capital
Share premium account
Profit and loss reserves
Total
Notes
£
£
£
£
Balance at 1 January 2022
203
15,144,228
(7,476,401)
7,668,030
Year ended 31 December 2022:
Loss and total comprehensive loss for the year
-
-
(3,447,007)
(3,447,007)
Balance at 31 December 2022
203
15,144,228
(10,923,408)
4,221,023
Year ended 31 December 2023:
Loss and total comprehensive loss for the year
-
-
(9,263,927)
(9,263,927)
Issue of share capital
19
3
8,999,997
-
9,000,000
Balance at 31 December 2023
206
24,144,225
(20,187,335)
3,957,096
The notes on pages 11 to 23 form part of these financial statements.
Profit and loss reserves represent all cumulative profit and losses of the Company, net of any dividends paid.
ENTERTAINMENT PARTNERS UK LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
- 11 -
1
Accounting policies
Company information
Entertainment Partners UK Limited is a private company limited by shares incorporated in England and Wales. The registered office is 1010 Eskdale Road, Winnersh Triangle, Wokingham, Berkshire, RG41 5TS.
1.1
Accounting convention
These financial statements have been prepared in accordance with FRS 102 “The Financial Reporting Standard applicable in the UK and Republic of Ireland” (“FRS 102”) and the requirements of the Companies Act 2006.
The financial statements are prepared in sterling, which is the functional currency of the company. Monetary amounts in these financial statements are rounded to the nearest £.
The financial statements have been prepared under the historical cost convention. The principal accounting policies adopted are set out below.
This 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:
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 financial statements of the Company are consolidated in the financial statements of Entertainment Partners UK HoldCo Limited. These consolidated financial statements are available from its registered office, 1010 Eskdale Road, Winnersh Triangle, Wokingham, RG41 5TS.
1.2
Going concern
Atruet the time of approving the financial statements, the directors have a reasonable expectation that the company has adequate resources to continue in operational existence for the foreseeable future. Thus the directors continue to adopt the going concern basis of accounting in preparing the financial statements.
This expectation arises due to continued support of the parent undertaking, Entertainment Partners UK HoldCo Limited, should the need for further financial support arise.
1.3
Turnover
Turnover is recognised at the fair value of the consideration received or receivable for goods and services provided in the normal course of business, and is shown net of VAT and other sales related taxes. The fair value of consideration takes into account trade discounts, settlement discounts and volume rebates.
When cash inflows are deferred and represent a financing arrangement, the fair value of the consideration is the present value of the future receipts. The difference between the fair value of the consideration and the nominal amount received is recognised as interest income.
ENTERTAINMENT PARTNERS UK LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
1
Accounting policies
(Continued)
- 12 -
Revenue from contracts for the provision of professional 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.
1.4
Research and development expenditure
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 and that the entity has the resources to complete the development and to use or sell the intangible asset.
1.5
Intangible fixed assets other than goodwill
Intangible assets acquired separately from a business are recognised at cost and are subsequently measured at cost less accumulated amortisation and accumulated impairment losses.
Amortisation is recognised so as to write off the cost or valuation of assets less their residual values over their useful lives on the following bases:
Development costs
1 - 5 years on straight line
Amortisation is commenced on intangible assets when they are substantially completed and start generating economic benefits for the Company.
1.6
Tangible fixed assets
Tangible fixed assets are initially measured at cost and subsequently measured at cost or valuation, net of depreciation and any impairment losses.
Depreciation is recognised so as to write off the cost or valuation of assets less their residual values over their useful lives on the following bases:
Office and computer equipment
33.3% Straight line
The gain or loss arising on the disposal of an asset is determined as the difference between the sale proceeds and the carrying value of the asset, and is credited or charged to profit or loss.
1.7
Impairment of fixed assets
At each reporting period end date, the company reviews the carrying amounts of its tangible and intangible assets to determine whether there is any indication that those assets have suffered an impairment loss. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment loss (if any). 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.
1.8
Cash and cash equivalents
Cash and cash equivalents are basic financial assets and include cash in hand, deposits held at call with banks, other short-term liquid investments with original maturities of three months or less, and bank overdrafts. Bank overdrafts are shown within borrowings in current liabilities.
ENTERTAINMENT PARTNERS UK LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
1
Accounting policies
(Continued)
- 13 -
1.9
Financial instruments
The company has elected to apply the provisions of Section 11 ‘Basic Financial Instruments’ and Section 12 ‘Other Financial Instruments Issues’ of FRS 102 to all of its financial instruments.
Financial instruments are recognised in the company's statement of financial position when the company becomes party to the contractual provisions of the instrument.
Financial assets and liabilities are offset, with the net amounts presented in the financial statements, when there is a legally enforceable right to set off the recognised amounts and there is an intention to settle on a net basis or to realise the asset and settle the liability simultaneously.
Basic financial assets
Basic financial assets, which include debtors and cash and bank balances, are initially measured at transaction price including transaction costs and are subsequently carried at amortised cost using the effective interest method unless the arrangement constitutes a financing transaction, where the transaction is measured at the present value of the future receipts discounted at a market rate of interest. Financial assets classified as receivable within one year are not amortised.
Impairment of financial assets
Financial assets, other than those held at fair value through profit and loss, are assessed for indicators of impairment at each reporting end date.
Financial assets are impaired where there is objective evidence that, as a result of one or more events that occurred after the initial recognition of the financial asset, the estimated future cash flows have been affected. If an asset is impaired, the impairment loss is the difference between the carrying amount and the present value of the estimated cash flows discounted at the asset’s original effective interest rate. The impairment loss is recognised in profit or loss.
If there is a decrease in the impairment loss arising from an event occurring after the impairment was recognised, the impairment is reversed. The reversal is such that the current carrying amount does not exceed what the carrying amount would have been, had the impairment not previously been recognised. The impairment reversal is recognised in profit or loss.
Derecognition of financial assets
Financial assets are derecognised only when the contractual rights to the cash flows from the asset expire or are settled, or when the company transfers the financial asset and substantially all the risks and rewards of ownership to another entity, or if some significant risks and rewards of ownership are retained but control of the asset has transferred to another party that is able to sell the asset in its entirety to an unrelated third party.
Classification of financial liabilities
Financial liabilities and equity instruments are classified according to the substance of the contractual arrangements entered into. An equity instrument is any contract that evidences a residual interest in the assets of the company after deducting all of its liabilities.
ENTERTAINMENT PARTNERS UK LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
1
Accounting policies
(Continued)
- 14 -
Basic financial liabilities
Basic financial liabilities, including creditors and loans from group companies are initially recognised at transaction price unless the arrangement constitutes a financing transaction, where the debt instrument is measured at the present value of the future payments discounted at a market rate of interest. Financial liabilities classified as payable within one year are not amortised.
Debt instruments are subsequently carried at amortised cost, using the effective interest rate method.
Trade creditors are obligations to pay for goods or services that have been acquired in the ordinary course of business from suppliers. Amounts payable are classified as current liabilities if payment is due within one year or less. If not, they are presented as non-current liabilities. Trade creditors are recognised initially at transaction price and subsequently measured at amortised cost using the effective interest method.
Derecognition of financial liabilities
Financial liabilities are derecognised when the company’s contractual obligations expire or are discharged or cancelled.
1.10
Equity instruments
Equity instruments issued by the company are recorded at the proceeds received, net of transaction costs. Dividends payable on equity instruments are recognised as liabilities once they are no longer at the discretion of the company.
1.11
Taxation
The tax expense represents the sum of the tax currently payable and deferred tax.
Current 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 company’s liability for current tax is calculated using tax rates that have been enacted or substantively enacted by the reporting end date.
Deferred tax
Deferred tax liabilities are generally recognised for all timing differences and deferred tax assets are recognised to the extent that it is probable that they will be recovered against the reversal of deferred tax liabilities or other future taxable profits. Such assets and liabilities are not recognised if the timing difference arises from goodwill or from the initial recognition of other assets and liabilities in a transaction that affects neither the tax profit nor the accounting profit.
The carrying amount of deferred tax assets is reviewed at each reporting end date and reduced to the extent that it is no longer probable that sufficient taxable profits will be available to allow all or part of the asset to be recovered. Deferred tax is calculated at the tax rates that are expected to apply in the period when the liability is settled or the asset is realised. Deferred tax is charged or credited in the 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 when the company has a legally enforceable right to offset current tax assets and liabilities and the deferred tax assets and liabilities relate to taxes levied by the same tax authority.
ENTERTAINMENT PARTNERS UK LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
1
Accounting policies
(Continued)
- 15 -
1.12
Employee benefits
The costs of short-term employee benefits are recognised as a liability and an expense, unless those costs are required to be recognised as part of the cost of stock or fixed assets.
The cost of any unused holiday entitlement is recognised in the period in which the employee’s services are received.
Termination benefits are recognised immediately as an expense when the company is demonstrably committed to terminate the employment of an employee or to provide termination benefits.
1.13
Retirement benefits
The Company operates a defined contribution plan for its employees. A defined contribution plan is a pension plan under which the Company pays fixed contributions into a separate entity. Once the contributions have been paid the Company has no further payment obligations.
The contributions are recognised as an expense in profit or loss when they fall due. Amounts not paid are shown in accruals as a liability in the statement of financial position. The assets of the plan are held separately from the Company in independently administered funds.
1.14
Leases
Rentals payable under operating leases, including any lease incentives received, are charged to profit or loss on a straight line basis over the term of the relevant lease except where another more systematic basis is more representative of the time pattern in which economic benefits from the leases asset are consumed.
ENTERTAINMENT PARTNERS UK LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
- 16 -
2
Judgements and key sources of estimation uncertainty
In the application of the company’s accounting policies, the directors are required to make judgements, estimates and assumptions about the carrying amount of assets and liabilities that are not readily apparent from other sources. The estimates and associated assumptions are based on historical experience and other factors that are considered to be relevant. Actual results may differ from these estimates.
The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised where the revision affects only that period, or in the period of the revision and future periods where the revision affects both current and future periods.
Critical judgements
The following judgements (apart from those involving estimates) have had the most significant effect on amounts recognised in the financial statements.
Capitalisation of development costs
Management have assessed that costs incurred in accordance with development of the Company's specialist products and services should be capitalised as intangible assets and subsequently amortised over their estimated useful lives, when the product being developed is completed and begins generating economic benefits for the Company. Management consider a range of criteria in the judgement of what costs should be capitalised, such as the technical feasibility of completing the intangible asset, the intention to complete the asset, the ability to use or sell the asset, how the asset will generate economic benefits and being able to reliably measure the expenditure attributable to the asset.
Recoverability of R&D tax credit claims
Due to the nature of certain Research & Development ("R&D") activities undertaken by the Company, an R&D Tax Credit claim in respect of the current year has been prepared, which is subject to approval from HM Revenues and Customs ("HMRC"), at the time of signing these financial statements. A degree of judgement exists as to the recoverability of this R&D claim, before approval of the claim from HMRC is received. Management have elected to recognise the tax credit and repayable taxation receivable within these financial statements, as they believe the record of past R&D claims being approved and repaid to the Company, provides a strong basis of likely recoverability for the current year claim.
3
Turnover and other revenue
2023
2022
£
£
Turnover analysed by class of business
Platform fees
2,429,276
2,388,552
Production portal licensing and fees
515,848
630,562
Royalty licences
1,183,014
4,140,573
Other professional fees
670,980
716,384
Software licenses
426,304
-
5,225,422
7,876,071
ENTERTAINMENT PARTNERS UK LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
3
Turnover and other revenue
(Continued)
- 17 -
2023
2022
£
£
Turnover analysed by geographical market
United Kingdom
3,438,923
3,019,116
United States of America
1,786,499
4,856,955
5,225,422
7,876,071
2023
2022
£
£
Other revenue
Interest income
21,115
54
4
Operating loss
2023
2022
Operating loss for the year is stated after charging/(crediting):
£
£
Exchange gains
(84,984)
(81,427)
Depreciation of owned tangible fixed assets
54,697
52,197
Profit on disposal of tangible fixed assets
-
(1,092)
Amortisation of intangible assets
1,489,476
-
Impairment of intangible assets
2,406,636
Operating lease charges
-
358,914
5
Auditor's remuneration
2023
2022
Fees payable to the company's auditor and associates:
£
£
For audit services
Audit of the financial statements of the company
20,000
17,142
6
Employees
The average monthly number of persons (including directors) employed by the company during the year was:
2023
2022
Number
Number
Administrative staff
84
79
ENTERTAINMENT PARTNERS UK LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
6
Employees
(Continued)
- 18 -
Their aggregate remuneration comprised:
2023
2022
£
£
Wages and salaries
6,013,581
4,807,714
Social security costs
941,412
792,131
Pension costs
406,562
245,784
7,361,555
5,845,629
7
Directors' remuneration
2023
2022
£
£
Remuneration for qualifying services
119,433
Company pension contributions to defined contribution schemes
-
3,583
123,016
The number of directors for whom retirement benefits are accruing under defined contribution schemes amounted to 0 (2022 - 2).
As total directors' remuneration was less than £200,000 in the prior year, no disclosure for highest paid director is provided for that year.
8
Interest receivable and similar income
2023
2022
£
£
Interest income
Interest on bank deposits
21,115
54
9
Interest payable and similar expenses
2023
2022
£
£
Interest on financial liabilities measured at amortised cost:
Other interest
6,293
10
Taxation
2023
2022
£
£
Current tax
UK corporation tax credit on R&D claims in the current year
(382,753)
(204,293)
R&D tax credits recognised in respect of prior periods
(295,523)
Total current tax
(382,753)
(499,816)
ENTERTAINMENT PARTNERS UK LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
10
Taxation
(Continued)
- 19 -
The actual credit for the year can be reconciled to the expected credit for the year based on the profit or loss and the standard rate of tax as follows:
2023
2022
£
£
Loss before taxation
(9,646,680)
(3,946,823)
Expected tax credit based on the standard rate of corporation tax in the UK of 23.52% (2022: 19.00%)
(2,268,899)
(749,896)
Tax effect of expenses that are not deductible in determining taxable profit
52,023
20,225
Change in unrecognised deferred tax assets
2,015,073
863,270
Group relief
200,235
46,443
Effect of research and development tax credit adjustments
(265,044)
(156,372)
Effect of super deduction enhanced capital allowances
(4,857)
Prior year R&D tax credits recognised in year
(295,523)
Effect of change in tax rate applied to deferred tax
(116,141)
(207,185)
Other adjustments to taxable profits
(15,921)
Taxation credit for the year
(382,753)
(499,816)
An increase in the rate of corporation tax from 19% to 25% became effective from 1 April 2023. This will impact the Company's future tax charges accordingly for any profits taxed at the main rate.
The Company has tax adjusted losses carried forward of £22,746,722 (2022: £14,794,153) and timing differences relating to accelerated capital allowances of £1,729,834 (2022: £1,699,645) and other timing difference with carrying value of £63,504 (2022: £138,502), for which a net deferred tax asset of £5,270,098 (2022: £3,308,253) has not been recognised in the financial statements, as the timing and probability of future taxable profits arising, against which to utilise these losses, is uncertain. The unrecognised deferred tax asset stated is calculated at 25%, being the rate of tax at the reporting date.
The unused tax losses do not have an expiry date.
11
Impairments
Impairment tests have been carried out where appropriate and the following impairment losses have been recognised in profit or loss:
2023
2022
Notes
£
£
In respect of:
Intangible assets
12
2,406,636
Recognised in:
Administrative expenses
2,406,636
-
ENTERTAINMENT PARTNERS UK LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
- 20 -
12
Intangible fixed assets
Development costs
£
Cost
At 1 January 2023
2,928,900
Additions
3,074,519
At 31 December 2023
6,003,419
Amortisation and impairment
At 1 January 2023
Amortisation charged for the year
1,489,476
Impairment losses
2,406,636
At 31 December 2023
3,896,112
Carrying amount
At 31 December 2023
2,107,307
At 31 December 2022
2,928,900
More information on impairment movements in the year is given in note 11.
13
Tangible fixed assets
Office and computer equipment
£
Cost
At 1 January 2023 and 31 December 2023
218,118
Depreciation and impairment
At 1 January 2023
113,146
Depreciation charged in the year
54,697
At 31 December 2023
167,843
Carrying amount
At 31 December 2023
50,275
At 31 December 2022
104,972
The Royal Bank of Scotland PLC hold floating charges over all the land, plant and machinery or undertaking of the Company, as way of security for any balances that may be payable to the charge holder.
ENTERTAINMENT PARTNERS UK LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
- 21 -
14
Debtors
2023
2022
Amounts falling due within one year:
£
£
Trade debtors
302,303
97,736
Corporation tax recoverable
586,986
399,193
Amounts owed by group undertakings
2,178,553
1,421,338
Other debtors
365,680
184,449
Prepayments and accrued income
130,376
218,207
3,563,898
2,320,923
Trade debtors are stated net of a £65,716 (2022: £nil) provision for doubtful debt.
15
Creditors: amounts falling due within one year
2023
2022
Notes
£
£
Bank loans and overdrafts
16
73
Trade creditors
544,845
226,712
Amounts owed to group undertakings
783,971
1,903,389
Taxation and social security
342,463
619,950
Deferred income
17
403,495
158,316
Other creditors
545,021
296,662
Accruals and deferred income
323,288
324,614
2,943,083
3,529,716
16
Loans and overdrafts
2023
2022
£
£
Bank overdrafts
73
Payable within one year
73
17
Deferred income
2023
2022
£
£
Arising from Software Licences
375,419
-
Arising from Production Portal Licences
28,076
158,316
403,495
158,316
ENTERTAINMENT PARTNERS UK LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
17
Deferred income
(Continued)
- 22 -
Deferred income relates to revenues invoiced in advance for Production Portal and Software Licenses sold. The Production Portal Licenses term can cover an invoicing period of 3, 6 or 12 months and usually recognised within 12 months of the reporting date. The Software Licences terms can cover an invoicing period from 1 to 3 years.
18
Retirement benefit schemes
2023
2022
Defined contribution schemes
£
£
Charge to profit or loss in respect of defined contribution schemes
406,562
245,784
The Company operates a defined contribution pension scheme for all qualifying employees. The assets of the scheme are held separately from those of the company in an independently administered fund.
At the year end, contributions of £63,504 (2022: £138,506) were payable in relation to defined contribution schemes.
19
Share capital
2023
2022
2023
2022
Ordinary share capital
Number
Number
£
£
Issued and fully paid
Ordinary shares of £1 each
206
203
206
203
Each Ordinary share has fulll rights in the Company with respect to voting, dividends and distributions.
During the year, 3 Ordinary shares of £1 each were allotted at a total premium of £8,999,997.
20
Share premium account
2023
2022
£
£
At the beginning of the year
15,144,228
15,144,228
Issue of new shares
8,999,997
At the end of the year
24,144,225
15,144,228
The share premium account represents the cumulative total paid above nominal value for shares allotted.
21
Financial commitments, guarantees and contingent liabilities
A charge has been made against the Company in favour of Royal Bank of Scotland PLC, to secure their interest in the assets of the Company, in regards to a £10,000 overdraft facility. No balance was owed to the charge holder at the current or comparative reporting date in respect of this overdraft.
ENTERTAINMENT PARTNERS UK LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
- 23 -
22
Operating lease commitments
Lessee
At the reporting end date the company had outstanding commitments for future minimum lease payments under non-cancellable operating leases, which fall due as follows:
2023
2022
£
£
Within one year
21,187
23
Events after the reporting date
Subsequent to the reporting date, but prior to the date of signing these financial statements, the following events of note took place:
The Company issued further Ordinary share capital of £1 each as follows:
1 share on 26 January 2024 at a premium of £499,999
1 share on 30 January 2024 at a premium of £4,499,999
1 share on 14 February 2025 at a premium of £599,999
1 share on 23 April 2025 at a premium of £399,999
24
Related party transactions
The Company has claimed exemption from disclosing related party transactions with other wholly owned entities within the same group, as conferred by FRS 102 paragraph 33.1A.
25
Ultimate controlling party
The immediate parent company is Entertainment Partners Holding Limited, whose registered office is 1010 Eskdale Road, Winnersh Triangle, Wokingham, RG41 5TS.
The smallest and largest group to consolidate the results of the company is the Entertainment Partners UK HoldCo Limited group, whose financial statements are available from its registered office, 1010 Eskdale Road, Winnersh Triangle, Wokingham, RG41 5TS.
The ultimate parent company is EP Global Production Solutions, LLC, a company formed under the laws of Delaware in the United States of America. The registered office of the company is 2950 North Hollywood Way Burbank, CA 91505 United States.
EP Global Production Solutions, LLC is owned by a number of shareholders and no one shareholder can exert individual control. As such, there is not deemed to be an ultimate controlling party.
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